MC GRAW SUES TEN WALL STREET FIRMS - "The Little Guy Who Isn't Smart"

(06/25/2003)

Ten Wall Street investment companies may have defrauded up to 750,000 West Virginia stockholders, which could mean "millions of violations of the state consumer protection laws." Attorney General Darrel McGraw filed the suit Monday morning in Marshall County Circuit Court. He says the companies publicly claimed their investment banking arms and research analysis arms were different. The state says the arms were not independent and were in fact working together to bolster projections and mislead investors. McGraw released some of the companies e-mails which indicate a problem. One e-mail talks about taking advantage of the little guy: "Well, ratings and target prices are fairly meaningless anyway...but yes, the little guy who isn't smart about the nuances may get misled, such is the nature of my business." Named in the suit are the companies; Bear Stearns, Credit Suisse, First Boston, Goldman Sachs, Lehman Brothers, Citigroup Global Markets, J.P. Morgan, Morgan Stanley, Merrill Lynch, UBS Warburg, and U.S. Bancorp Piper Jaffray. McGraw projects that every transaction made during the time period from July 1, 1999 to the present is a potential violation. West Virginians most affected are those who hold stock in mutual funds. Corporate scandals like Enron and WorldCom have recently cost investors, workers and small businesses an estimated $500,000,000,000 (billion) dollars.

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