Sans research analysts secretly trashing the stocks they cover and it's the year 2000 all over again. Dow Jones Newswire reports on some of our clients whose financial advisors allegedly placed their savings into unsuitable investments tied to the speculative subprime loan market. Here's an excerpt profiling one of Zamansky & Associates' clients:
In his claim against Oppenheimer, investor Kevin Haynes, a freelance writer and editor, argues that his broker, Alvin Corwin, shifted him out of blue-chip stocks and over-aggressively concentrated his portfolio in American Home Mortgage (AHMIQ), a mortgage lender that ultimately filed for bankruptcy protection in August. Although it wasn't a "subprime" lender, American Home Mortgage offered Alt-A mortgages - mortgages offered to more creditworthy borrowers than subprime loans, but that often have adjustable rates and sometimes require little or no documentation.
When Corwin would recommend buying more shares in American Home Mortgage, Haynes, 50 years old, said he would ask "Aren't we putting too many eggs in one basket?" Haynes recalled. "He said, 'No, this is a smart play...You've got to do this.'"
As the subprime crisis widened in June 2007, Haynes, who lives in Manhattan's Financial District, met with Corwin and told him he wanted to get out of American Home and that he couldn't tolerate a large loss from such a substantial holding, the claim said. Corwin adamantly advised Haynes to keep holding onto the stock, the claim says, and Haynes did. Shortly after, the claim says, Haynes' shares dropped to $1 each and American Home filed for bankruptcy protection.
Another one of our clients was profiled in the article as well. This demonstrates a distressingly similar trend reminiscent of the dot-com bust, right down to a broker insisting, “Who ever lost money in real estate?"
This is likely only the tip of the iceberg as I've already been approached by other investors with similar cases.