Revamping Wall Street’s Tarnished Image
What a difference a year makes - and no one knows this better than Wall Street.
As the turmoil that began with the subprime mortgage debacle intensified and began to eat away at the credit markets over the past 12 months, major investment banks and securities firms such as UBS, Citigroup, Morgan Stanley and Merrill Lynch found themselves in precarious financial straits, taking billions of dollars in write-offs on bad investments.
Meanwhile, financial advisors and brokers had the unpopular job of placating nervous clients, assuaging fears that their investments were safe and sound. A particularly challenge feat considering the parent companies’ poor investments had left their own financial houses far from being in order.
Reporter Helen Kearney writes an in-depth article titled The Strongest Link in the June 1 issue of OnWallStreet.com regarding the health of the brokerage divisions inside the largest and most prestigious Wall Street firms. Among other things, she discusses the mounting frustration felt by financial advisors as they attempt to conduct business in today’s climate of corporate losses, deception and market failures.
The article underscores the fact that while it’s never easy to serve as the bearer of bad news, image is indeed everything. This holds true for any industry - and maybe even more so for the brokerage world, where stories of corporate meltdowns, breach of investor trust and mounting lawsuits are daily news headlines.
As Kearney’s article states, a handful of wealth management companies are taking proactive approaches with their advisors and brokers, issuing communications on what they are doing to shore up balance sheets and setting up weekly conference calls between executives and sales.
Still, brokers may be growing weary of making excuses for their companies’ missteps, with many expected to jump ship in the not-so-distant future from the most prestigious brokerage houses to an independent channel.
“The illusion of the safety that comes with working at a big firm has been shattered by the collapse of Bear Stearns,†says Philip Palaveev, a principal at Seattle-based consulting firm Moss Adams, in Kearney’s article.
The bottom line: In a financial climate that has witnessed the failure of the auction-rate securities market, the collapse of countless once-popular hedge funds and the fall of the mighty Bear Stearns, the health of the nation’s brokerage house is in need of a dire image overhaul - and fast.
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
