Oklahoma City securities lawyer A. Daniel Woska has never seen a year like this before. Usually, the arbitration expert handles 20 to 50 cases a year for disgruntled investors seeking to recover their stock market losses from Wall Street firms.
This year, Woska and a Houston firm have already teamed up to handle 330 complaints, and other law firms, aware of his expertise in broker-dealer cases, have been referring other cases by the bundle. By the end of the year, Woska expects to have brought almost a thousand complaints for investors who allege that biased research reports from analysts at Merrill Lynch & Co, Citigroup Inc. and other financial firms have cost them their life savings.
“I’ve been doing [this] for 25 years, and I’ve never seen anything like it. We had to go out and borrow several million dollars to staff up for this,” said Woska, 50.
Although the arbitration departments of the New York Stock Exchange and NASD are gearing up for a flood of analyst-related cases, some securities lawyers say the crush of cases may mean that the arbitration — which has been taking an average of 14 months at NASD — will take far longer.
Regulators said earlier this year that the details released in the Wall Street settlement could serve as a road map for shareholders wishing to pursue lawsuits. But in light of recent court decisions, securities law experts said they expect most of the successful claims to come from arbitration.
Yesterday, U.S. District Judge Milton Pollack threw out a case in which an investor in the Merrill Lynch Global Technology Fund claimed that the fund’s directors, advisers and affiliates failed to disclose that the fund was investing in companies with which Merrill had or sought investment banking business.
The plaintiff also claimed Merrill issued misleading research on companies in the fund’s portfolio and invested in companies to win banking business, not because the companies were good investments