NYSE Should Follow the Merrill Market-Timing Trail Wherever it Goes
Finally the market-timing bonanza and the rush to judgment by Eliot Spitzer is coming home to roost. Yesterday a decision issued by the U.S. District Court in Manhattan rejected an appeal by Merrill Lynch which sought to vacate an arbitration decision to award $14 million to three brokers now known as the “CBS Group,” who were dismissed and allegedly defamed after participating in market-timing activities while in the firm’s employ. http://online.wsj.com/article/SB117504262361851160.html?mod=todays_us_money_and_investing
This was largely a technical legal victory, but its an important step towards affirming that many of the dismissed brokers involved in market timing were scapegoated by Wall Street firms eager to appease Spitzer with minimal fines, sacrificial lambs and, of course, the ability to neither admit or deny guilt.
It should also be interesting to see how the recent investigation opened up by the NYSE into the trio’s former manager at the Paramus, N.J. branch of UBS AG shakes out. The manager was recently fined $50,000 for failing to supervise three unnamed financial advisers involved in market timing.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070110/REG/701100704/-1/BreakingNews04 It doesn’t take a snoop to come to the conclusion that the CBS Group was also participating in market-timing with management’s blessing at their former employer.
It is my hope that the NYSE continues its investigation as far up the ladder as is justified even if it means more heads must roll. Clearly market-timing was not a “rogue” issue but a strategy well embedded in Wall Street’s most prestigious firms.
Jacob ("Jake") H. Zamansky is one of the country’s foremost authorities on securities arbitration law, the legal recourse for investors claiming broker wrongdoing, or for brokers claiming wrongful termination or other misconduct by their employer. Zamansky & Associates, the New York-based law firm he founded, represents both individuals and institutions in complex securities, hedge fund, and employment arbitrations.
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