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In This Volatile Market, Investors Are Turning To Portfolio & Securities Litigation Monitoring

In one unforgettable week on Wall Street that ended on October 10, 2008, investors in the US financial market felt the full effects of the US housing market melt-down when they lost an estimated $2.4 trillion. The Dow Jones Industrial Average plummeted by 18%, bringing the total decline to 40%, roughly $8.3 trillion in shareholder losses since the stock market’s peak a year ago.

Although the latest stock market crash that spread across the globe was blamed on insolvent financial institutions, the international credit crunch and fearful investors, the impetus for the world’s current economic crisis was the collapse of the US housing market, which was sustained for several years by a subprime mortgage industry plagued with widespread securities and consumer fraud. As the US housing bubble was bursting, corrupt lending practices and illegal accounting practices tied to the subprime mortgage industry were being hidden from the investing public.

Understanding that some recent market losses are on account of corporate fraud, investors now, more than ever, should seek to recoup their losses by participating in securities class actions and recoveries. To that end, adopting careful portfolio and securities litigation monitoring services is essential. These services help institutional investors: (1) verify which of their investments were adversely affected by corporate fraud; (2) determine the amount of investment value lost due to securities fraud; and (3) decide whether to participate in investor-led securities class actions to recoup their losses. Portfolio and securities litigation services keep institutional investors informed about how the current worldwide financial crisis affects their holdings, and which specific market losses stem from corporate misconduct and are recoverable.

Scott+Scott LLP provides comprehensive investment portfolio and securities litigation monitoring services for its institutional investor clients through the firm’s proprietary Portfolio Tracking + Loss Recovery SystemSM (“PT+SM”).
Scott+Scott offers this service free of charge to its institutional clients.

Identifying Corporate Fraud in a Volatile Market

During the month of October, the US stock market was nothing short of a rollercoaster ride. The volatility of the market was relentless. Out of the first 20 trading days in the month, only two days did not end with the Dow Jones closing up or down by triple digits. To illustrate, after a week of record-breaking losses, the US market rebounded to close on October 13, 2008, with an unprecedented one-day 936-point gain. Even though the gain only represented roughly half of what investors lost the previous week, this remarkable one-day turnaround left many speculating about what changed in the mindset of investors. For instance, some speculated that investors may have been emboldened by the worldwide efforts to stimulate the credit markets, or that investors may have just been making a simple bet that the worst part of the crisis is behind us. Those investors that bet that the worst had passed were quickly proven to be mistaken because, within two days, all but 127 points of the astonishing 936-point gain had vanished. On October 14, the market lost a manageable 76 points. But then on October 15, on the heels of demoralizing news for the US economy, the market suffered a 733-point drop, representing the second largest one-day point loss ever. Then, on October 28, despite several unfavorable economic reports, the market — for no apparent reason — rebounded by skyrocketing nearly 900 points. With such a highly-unpredictable market, no one can be sure about what will happen from one day to the next for the foreseeable future.

In this market, however, the primary challenges facing institutional investors responsible for large investment portfolios are determining which of their fund’s recent market losses are a result of corporate fraud, and if their fund is eligible to participate in and recover from a particular securities class action. Scott + Scott’s PT+SM System provides invaluable assistance to institutional investors in maximizing their recoveries. Organizations around the world strongly advise that institutional investors and pension plan trustees ensure that they are participating in securities litigation and not missing out on recovering their rightful share of potential settlements.

At no charge for attorney fees or costs, Scott+Scott’s PT+SM System provides institutional investors with the information and insight necessary to make careful and informed decisions as to corporate fraud-related investment losses, whether it be to actively participate in securities litigation as a representative plaintiff, to remain a silent beneficiary of such class action litigation as an absent class member, or to pursue private litigation on a non class-action basis.

Institutional investors increasingly rely on Scott+Scott’s PT+SM System for a number of important reasons. First, the recent wave of widespread corporate malfeasance associated with the subprime industry has triggered a significant increase in investor-led securities class action filings, making it more difficult for an investor to track and monitor the progress of each action. It is important to monitor all of these class actions carefully to ensure that a fund does not fail to benefit from a recovery.

Second, as the number of securities class action filings increase, so have the different kinds of investment vehicles involved in these actions. It is crucial for an investor to recognize and identify the type of action brought and the specific securities involved to properly participate in any potential recoveries. The PT+SM System indentifies for the investor whether equities or other investment vehicles, such as options, notes, auction rate securities and CDOs, are the subject of a particular action and whether the investor is then eligible to participate in the class action and potential recovery.

In light of the subprime mortgage industry collapse and subsequent global financial crisis, it has become increasingly difficult for institutional investors to accurately identify which of their fund’s holdings have been adversely affected by fraudulent activity, and which securities class actions they are eligible to participate in as a class member to recoup their losses. But with the help of Scott +Scott’s capable and comprehensive PT+SM System, institutional investors can remain informed of all corporate fraud and class actions stemming from the current global financial crisis that concern their vast investment portfolios and ensure that their rightful shares of recoveries are obtained. 

 

newsletter nov2008.jpg Source : Scott+Scott November 2008 Newsletter

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