Burned investors aren't the only ones seeking restitution from Wall Street giants.
Stockbrokers, stung by the tainted research of their own firms, are starting to dial up the very attorneys who would normally name them as defendants. They often call to refer their clients, who entrusted them with money that vanished in highly touted stocks. But one by one, they're also starting to ask for legal representation for themselves.
"This is the coming wave," said Christopher Bebel of Shepherd Smith & Bebel, the largest boutique law firm in the country. "In the coming months and years, stockbrokers will join forces with their clients. And together, they will sue the brokerage firms."
That trend hasn't erupted yet, according to several Wall Street firms contacted this week by
. But Boyd Page, a senior partner at a securities firm in Atlanta, said his firm has begun fielding a "fair number" of calls from brokers hoping to fight back against their firms. So far, Page has chosen to stick with his specialty, representing investors, to avoid any perceived conflict of interest. Still, he sees clear merit in the stockbrokers' cases.
"They feel every bit as victimized as their clients do," Page said. "The clients' portfolios have been damaged -- and their own business has been damaged in the process."
To date, the best-known stockbroker complaint has been filed against Salomon Smith Barney. Former stockbrokers Phillip Spartis and Amy Elias took aim against their old employer early last year, after the
unit began settling suits filed by
employees who got burned when they poured huge sums of money -- some of it borrowed -- into their company's own stock.
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The brokers, who were individually named in the suits, are angered by the black marks the settlements have left on their records. They claim their clients insisted on listening to Salomon Smith Barney analyst Jack Grubman -- whose star has sunk with WorldCom's stock -- instead of their own advice.
"The firms are trying to point their fingers at the brokers and argue they were accountable for their own misconduct," Page said. "But the evidence is pretty compelling that these firms were responsible."
Salomon Smith Barney said this week that it continues to believe the brokers' case is without merit. But the research house faces a heated battle. The two former brokers have secured a big-time securities attorney, Jeffrey Liddle, to handle their high-profile case. Liddle has scored some seven-figure victories against Wall Street firms in similar cases already.
For now, Page continues to refer the stockbrokers who call him to employment-based attorneys. But Thomas Ajamie, of Schirrmeister Ajamie in Houston, is still toying with the idea of adding stockbrokers as clients.
And Bebel's firm already has.
Broke and Broker
One of Bebel's potential clients, an unemployed stockbroker in California, feels robbed of his career.
The broker, who asked to remain anonymous, was supposed to be rich three years ago. He went to work for
in 1997 with the promise that -- after a few lean years -- he could expect a good six-digit salary. He says did as he was told, touting Merrill Lynch's research as the best on the Street. And he fared well.
But he says he squirmed under the pressure to sell Merrill Lynch products that he began to view as worthless. He felt outright silly, for example, pushing the firm's $250 "financial foundation plans" -- supposedly a history of the stock market -- on his wealthy clients in order to meet quotas.
"Merrill later got rid of the foundation plans," he said. "People were doing them on dogs and babies" just to meet their quotas.
"It was so meaningless."
Contacted this week, Merrill Lynch described the plans as valuable groundwork tools for new clients and indicated that they are still in use. Merrill Lynch also squarely denied that it has ever pressured brokers to sell products that are unsuitable for clients. The firm said it compensates brokers according to "how well they do by their clients," offering no additional incentives for selling its own proprietary products.
"It's untrue that our people are compensated on any other basis other than providing the best financial advice to their clients," said Merrill Lynch spokesman Mark Herr. "For someone to allege
otherwise ... is simply false."
Whatever the case, the former broker lasted less than two years at Merrill Lynch. Exhausted by the pressure, he accepted a $35,000 exit bonus and went to work for
At Morgan Stanley, things looked up -- momentarily. The Merrill Lynch burnout quickly learned volumes and landed a spot at the firm's biggest branch in the country.
But the same old industry pressures soon returned. The heat would start with hardball sales meetings on Mondays and continue into the week with follow-up visits from liaisons promoting the research of high-tech analysts such as Mary Meeker.
"They'd say things like, 'All you need is a spacesuit because this stock is going to the moon,'" the former broker said. "They were very convincing, but I don't think they believed any of that."
In time, the firm's starry-eyed broker stopped believing, too. When he scored a couple of shares of
through an initial public offering -- his only IPO windfall ever -- he knew exactly what to do.
"The stock started at $15 and went straight up," he said. "I sold it that same day.
"They all knew it was junk."
Morgan Stanley didn't respond to questions on Monday.
Since then, Ariba's stock has plunged to under $3 a share. And the former stockbroker has moved on. After just a year at Morgan Stanley, he took a job at an obscure California firm that's now being sued for reneging on investment contracts with its clients.
The broker, a defendant in at least one of those lawsuits, is crusading to get his clients' money back.
"I talk to my old clients every other day," he said. "And they still talk to me.
"But it's hard for them. And I don't blame them for that."
In the meantime, the unemployed broker continues to hunt for work. He hopes to find something in the financial arena, maybe at a bank, because he's invested so much time in the field. But he's already turned his back on the brokerage industry that launched -- and killed -- his career.
"I've worked for the most 'credible' firms" on Wall Street, he said. "And I don't ever want to go back to that."