The Conflict of Interest Game



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Summary:

Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley's high-tech mutual funds of making biased stock picks.

Recent lawsuits allege the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment banking fees - or could potentially bring big business - to the investment bank.

According to the lawsuits, the Morgan Stanley fund followed the biased recommendations of the firm's analysts - decisions that have cost shareholders millions of dollars since the portfolio's October 2000 inception.

The fund lost 48 percent in 2001 and was down another 50 percent during the first nine months of 2002.


Article:

Disgruntled investors are going considering Wall Street once again, this time allegation one of investment bank Morgan-Stanley's high-tech mutual funds of making tipsy stock picks.

Recent lawsuits denounce the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment fees - or could potentially tutor big affair - to the investment bank.

According to the lawsuits, the Morgan Stanley fund followed the aslant recommendations of the firm's analysts - decisions that have cost shareholders millions of dollars since the portfolio's October 2000 inception.

The fund lost 48 percent in 2001 and was down of another sort 50 percent during the first nine months of 2002. While Morgan Stanley strongly denied the allegations, I fail to see how the management of the fund is somehow distinct from the other divisions of Morgan Stanley. Ultimately, they all work for the same boss.

The suits further lay fee that the tech fund failed to disclose that the firm had investment diving ties with a number of companies whose stocks were part of the portfolio. They also failed to reveal that those links could flaunt the fund's buy or sell calls.

Why carry out all this up? For one thing, it is interesting to note that Morgan Stanley offered four of these types of funds in October 2000. Just in every quarter the time when we sold all of our positions (Oct. 13, 2000) and it became clear, at least to those of us who were tracking long-term trends, that a major trend silver had taken place.

More recently in the news it's been Merrill Lynch who had a questionable deal involving transactions with failed energy trader Enron. Of course, the financial services industry regulates itself so well, that an $80 million payment to the SEC is sufficient to wrap up this case without admitting or denying wrongdoing.

What's the moral of this story? While it is impossible to predict these accountable conflict of interest schemes, it is definitely possible to follow a disciplined imminence and be on the “right” side of the market so you can blench jumping all aboard a sinking ship.



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