Widow lost savings in Facebook stock, sues all concerned for $1.9m Global financial services firm Morgan Stanley is trying to get its name removed from the securities case of a New Jersey widow who lost her life savings in the Facebook IPOcalypse. Uma Swaminathan filed an arbitration complaint with the Financial Industry Regulatory Authority (FINRA) looking for $1.9m compensation for the …
No, she's not disappointed by a loss in the market, she's disappointed by illegal activity on the part of the banks and brokerages.
If I lose money at a casino playing blackjack because I get bad cards, then that's on me, but if I lose because the casino is cheating, then I do have a right to be upset.
"she's disappointed by illegal activity"
Were any laws actually broken? if not, then it's not illegal and that would be for a court to decide,
Sharp practice? Sure.
Dishonest? Sure.
Immoral? Sure.
And if the conspiracy theory is true, then the laws might need to be changed to cover this situation. Certainly, the ability to weasel out of this due to the lack of any governing body is staggering.
But I wonder why she isn't going after Vanguard? Surely they are guilty of negligence or malpractice if what she claims is correct?
Of course, just like in the UK when the banks collapse, the rich can afford justice that simply isn't available to the rest of us.
And if you are losing at blackjack...you need to practice more memory and counting games. Ahem. Cough. Cough.
"Were any laws actually broken?"
That's for the court to decide but as she's not actually one of Morgan Stanley's customers, I'd say that severely diminishes her ability to sue them. They give advice to their clients and if a third party gets hold of that advice and acts on it, I'm not sure she has a legal basis to sue.
I started off being semi-sympathetic when reading this story (even though I and many others were all pointing out that Facebook was a disaster waiting to happen and everyone should have been clearly warned by it's insane P/E ratio). But that sympathy took a second substantial hit when I saw that the figure sued for includes $1million for suffering. No doubt it was really horrible thinking she'd lost all that money, but (a), it's a pretty ill-defined thing to sue for and (b), if you invest $1,000,000 dollars and a shareprice drop wipes out $100,000 (the compensatory damages figure), you still have $900,000 which is a figure many of us would like to have.
> No, she's not disappointed by a loss in the market, she's disappointed by illegal activity on the part of the banks and brokerages.
I kinda think it IS all to do with her losses. She wouldn't be suing all and sundry if the price had risen. unless she gets "pain and suffering" from trying to work out all the ways she could spend the profits she made.
The stock was very obviously overhyped and over valued because of all the numpties who wanted a slice of the FB pie at any cost so they could post "OMG!!! I own some of FB!!!!" on theiir wall. Those numpties were buying on emotion, not on well researched stock value.
All the "professional" stock traders knew this. They were not buying based on true stock value, but knew that if things went right for them they could make a killing off the numpties. They were playing the players.
Anyone with $1.9M to play on stocks should get better advice and stay away from high risk. If anyone cheated her, it was some stock trader shylock who got left with a pile of FB to get rid of and dumped it on gran telling her it was a good bet.
Oh look, another rabid commentard who couldn't stop driblling and sptting bile in their rush to hit the "Make a comment and make an arse of yourself" button!
Did you even RTFA? She's complaining that the bank who was handling the trades ballsed it up and never gave her a fighting chance to control the situation as they should by law, she's not complaing about the loss directly you arsehole!
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She claims $1.9m:
a) $105,000 in compensatory damages,
b) $500,000 punitive damages
c) $1m for "pain and suffering"
d) $315,000 in treble damages, awarded in instances of fraud
Total: $1.92m
I can understand either (a) or (d), but not both added together otherwise it would be quadruple damages not treble. While we are at is (b) and (d) look like duplication too. If this is right, shouldn't there also be claims for $350,000 for suffering and $650,000 for pain?
Evidence all round is that maths (especially probability) isn't her strongest suit. And while I have considerable sympathy for the argument that the bankers may be proven to have withheld information that they had a formal duty to disclose (as opposed to merely a moral duty - sad experience of recent centuries is that no reasonable adult expects a company to uphold a mere moral duty) demanding nineteen-fold compensation for a loss does seem like a bit of a reach.
IMO she brought this all upon herself. Because when you deal in stocks, and know what you're doing, you'll quickly learn that you can't put your trust in individual sources of information. The fact that some company allegedly withheld information is not even relevant here; if you invest in a firm which is new on the market you should know that there are risks involved. Huge risks... Its a given.
In fact; its reasons like that why "newbies" are commonly advised not to deal with stuff like this but instead invest their money in obligations or bonds which may make less money, but its also a whole lot safer. Especially if you don't fully understand how the stock market works. Another well known unwritten rule is that if you do start investing in stocks its always a good idea to spread your 'wallet'. At least make sure that you have some 'leverage' (bonds, obligations, etc.) which can help you minimize the risks should your stocks suddenly plummet.
Look it up; those suggestions can be found all over the Net. And the most important rule of them all: Don't bet all your money on a single 'horse', especially if you don't know what you're doing.
I would expect that someone who's investing his/her life savings would do some preparing; like in the very least reading up on how this stuff actually works before you dive in.
Sorry but all I'm seeing here is someone who thought to get rich quickly, invested without understanding what she did and now lost her money. Yes, it happens. And now the whole world is to blame except for herself.
I see a direct parallel from years ago: a Dutch internet company called "World Online", at that time led by Nina Brink, also went to the stock exchange. And hundreds, if not thousands, of people were already lined up to buy their stocks.
Fun part was that if you did a small bit of calculating, like taking the opening price of the stock, then looking at the amount of company employee's, multiply that amount with the minimum wage you'd soon realize that something didn't quite add up. If you then checked up with the assumed amount of customers, then multiplied those amounts with a common price which World Online charged for their services you'd see that the rough (estimated) value of the company didn't even qualify for the opening price they charged.
Sure; this calculating was all speculation too. But at least it gave you a very good hint at what could be going on. I was tempted to buy in too; but after that calculating decided it wasn't worth the risk. Of course no one believed you if you warned friends that this wasn't a safe investment.
And looking back it turned out to be true; stock value plummeted in one single day. After a few hours they even halted the trade of the stock to avoid further damages.
Within a week the value went from (iirc) E 48,- to E 8,-.
And after all that thousands of people complained. Just like this woman does. The brokers where they got their stocks didn't provide enough information, their stocks didn't sell quickly enough, information was allegedly withheld.... All the things which this woman now claims were also used as arguments here in Holland back then.
Of course; no one got any compensation what so ever because it was all within the law. Nina Brink earned a fortune, many stock buyers lost hundreds (if not thousands) of Euro's and that was also the beginning of the end for World Online.
Even so; if you do your homework and try to prepare yourself (at least learn something about the stock exchange before diving in head first) you can avoid stuff like this.
But the last thing you should do is buy stocks with the idea to get rich very quickly. It doesn't work that way and 9 out of 10 times it'll bite you in the behinds.
"The best way to make a small fortune on the stock market is to start with a large one." - probably well known, but told to me years ago by a girlfriend whose father had done exactly that.
It does amaze me that people put so much trust in the opinions of others without doing at least the basics of their own research, and perhaps more importantly, looking a little harder at why certain people are saying good/bad things about some stocks. There were a couple of fluffy "feel good" reports about Phorm a couple of weeks ago about how it was all going swimmingly and world domination was just around the corner. So no great surprise when they raise more money on the market last week.
There seem to be more and more of these 'whining investors taking legal action' stories all the time; the mindset seems to be that you've done the world a favour by putting up your money, and you positively deserve a return without reality inconveniently intervening. Ironic that I'd guess these would be exactly the same people who would decry anyone claiming benefit for their sense of 'entitlement'.
If you're not prepared to do at least some decent legwork, you really shouldn't be surprised when "the value of shares can go down as well as up" comes up tails.
Unfortunately much of what you say is wrong.
As participants in a regulated industry, there are legal responsibilities on many of those publishing information. They have a professional and legal duty in many aspects. Thus IF (and I make no judgement here) someone did withhold information, then they may very well have broken the law and thus it may well be relevant.
Your recounting of the World Online fiasco is also badly flawed in many factual ways, the most pertinent one being your claim that everyone acted "within the law". The Dutch Supreme Court upheld the majority of the lower court's findings that both World Online, issuers and the lead managers had all acted wrongfully in a number of instances including the publication of incomplete and inaccurate information and failing to correct such information when they could have.
So yes, one should most certainly be cautious about investing and not necessarily trusting everything you hear, but there is most certainly a legal obligation on the key players and consequently one can - legally - put a certain reliance on some of what one is told from those players.
The first rule should always be only ever spend money you can afford to lose! Share trading IS gambling, but with better suits.
I speak from experience, after my own brief foray in to the stock market turned around £10k worth of savings into about 500 quid! You live and learn ;-)
Rule 2: Avoid investing in a company if you don't understand how its operation will generate a continuing and growing cash flow - e. g., by selling product or providing a service. IBM has done rather well for quite a while.
Rule 3: If you expect to make a profit in under a few years, recognize that you are gambling just about as much as if you went to a casino. Depending on your choice of games, the casino odds could be better.
Long term (~40 year) investment in equity securities, sensibly chosen, historically has provided decent returns. Day traders as a group, I suspect, have not done very well. The real way to make money trading stocks is to be the broker earning commissions.
She'd be better off going to vegas and trying to renege on a lost poker hand at the high-stakes table. She'd wake up next to the curb with two broken legs.
This is a simple case of eager lawyer willing to throw a piece of C__P legal suit at a wall and see if it sticks.
"This is a simple case of eager lawyer willing to throw a piece of C__P legal suit at a wall and see if it sticks."
Can you blame him? She's got 'mug' written all over her. I'll bet he's got her to invest in his law firm too, selling the fact that they've just taken on a high-profile case involving facebook.
... can go down as well as seriously down!
Any financial advisor would have told her that putting all of your eggs in one basket is not a good idea, that's why you keep a diversified portfolio so if one part of it takes a dive the rest of it is still there.
Maybe there was sharp practice, maybe it was illegal, but what she did was *certainly* stupid.
Going by her numbers, she says she lost 105k on shares that went down by 8$, that means about 13k shares. 13k shares at 42 (forgotten what they opened at, but it will do) is over half a million, but if she sold at 34 she got $452,000 back. She is hardly destitute and has hardly "lost her life-savings".
She is now looking to get 1.9 m (let's say 1.2 after legal fees and her lawyers cut) so over twice as much as she invested, plus she still has the 450k she got from selling the shares. Not a bad deal if she wins....
And we wonder why there are so many lawyers around.
"She is now looking to get 1.9 m (let's say 1.2 after legal fees and her lawyers cut) so over twice as much as she invested, ..."
I think this should read
"She is now looking to get 0.2 m (after legal fees and her lawyers cut of 1.7m) so over twice as much as she invested, ..."
Or am I being cynical?
Colin
The stock market is a bad idea. Be that for companies or people trying to make money in them. It almost never works out for normal people.
It works out for the cheaters who get away with cheating and stealing in the stock market.
This is why I am never going to invest in the stock market. My money is better kept safe in my bank.
Wow!!! I need to get into this gambling thing. If I understand correctly, a woman bet all her chips on one square and when the wheel didn't fall on her number, she decided to sue the guy spinning the wheel because he failed to tell her that the wheel might not land on her number?
I'm sorry, but I'm busting a gut here. Gotta love this mentality :)
[b] (see [a] above)... could someone please tell her I know of this wonderful investment opportunity. Let's call it Ponzi UK Limited. I am prepared to let her in on the company at the ground floor. Of course, I'll need to take a commission payment up front to cover my costs....
If the widows attorneys were to check the patents of Dataquill on www.dataquill.com then they may very well find that anyone offering social networks or advertising on the internet is infringing their patents and if that is the case then of course it was a false prospectus! See also the HTC-Dataquill announcement and think about the possible implications for all Smartphone companies excluding Dataquill's licensees.
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