This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

How to Get Revenge on Wall Street

Let's say you're a Citigroup (C - Get Report) brokerage customer, and two years ago, at the urging of your broker, you bought a bunch of WorldCom shares. Your broker iced the deal by bragging about how the firm's hotshot telecom analyst, Jack Grubman, kept predicting the stock was going to the moon.

Two years later, your investment in WorldCom is practically worthless, as the telecom giant struggles to emerge from bankruptcy. Grubman, meanwhile, has been drummed out of the securities business -- exposed as being nothing more than a Wall Street version of a snake-oil salesman.

It's a situation that describes the predicament facing many investors who got burned buying stocks based on Wall Street hype, whether they got hit by Grubman's questionable turnabout on AT&T (T - Get Report) or one of the more outlandish buy recommendations on Qualcomm (QCOM - Get Report), Amazon (AMZN) or JDS Uniphase (JDSU - Get Report).

So what's the best way for investors to exact a measure of revenge against Wall Street? Should you file an arbitration claim against an analyst and his brokerage firm, or join one of the dozens of class-action lawsuits that have been filed in the aftermath of last year's investigation into tainted stock research?

Related Stories
Wall Street's Loss Won't Be Your Gain
How to Get Revenge on Wall Street
The Art of Arbitration
Is Class Action Right for You?

There's no right or wrong answer to choosing a legal strategy. A lot will depend on the extent of your losses, the strength of your claim and the amount of time you're willing to devote to pursuing the matter. Joining a class-action suit probably makes the most sense if your losses are small, you rarely read an analyst's report from cover to cover and you don't have the time or patience to work closely with an attorney.

Unlike an arbitration, a class-action requires little work on the part of an investor. Trial lawyers do all the heavy lifting in a class-action and foot all the expenses that are associated with bringing the case. Basically all an investor needs to do is agree to be a part of the "class" of litigants and await the outcome.

Of course, you often get what you pay for with class-action litigation.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,217.09 +25.72 0.15%
S&P 500 1,999.28 -2.88 -0.14%
NASDAQ 4,620.1820 -17.8120 -0.38%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs