Defense Lawyers See Bonanza From Lehman, Bear

Bloomberg is reporting what securities defense attorneys have experienced - the demand for defense counsel is on the rise. The article focuses on the criminal side of the equation, and the civil side - in regulatory investigations and arbitrations - is running right along with it.

Great quote from Herb Stern, Joseph Nacchio's lawyer:

The community is angry, and that anger cuts across all economic class lines,'' Stern said. ``The community, the mob, is looking for heads. A defense attorney has to bring sanity and realism to protect the client against scapegoating.

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Bloomberg.com: Exclusive: "Defense Lawyers See Bonanza From Lehman, Bear, Other Collapses"

What's Going On At Ameritrade?

A caller to my office alerted me to this bit of news. First, we have been getting tons of calls about the online brokers (specifically E-Trade, Ameritrade and TD Waterhouse) and margin liquidations. Callers are complaining that their positions are being sold out for margin calls, without ever receiving a call or an opportunity to make a cash deposit. We are looking into some of those cases.

But the Ameritrade issue is a bit different - an inability to log on or to get a rep on the phone. This one is an more interesting set of facts, at least for a securities lawyer, since there is an implicit, if not explicit, requirement that the firm make its reps available to its customers, either online or by phone. You can't simply take someone's account, and then refuse to service the account.

There are apparently a large number of investors who are having this problem, and it has become a topic of conversation - angry conversation - at the Google Finance board for Ameritrade -

Merrill's Retention Bonuses Come in Low

Looks like we will see a flood of Merril reps leaving. With competitors offering 200% of trailing 12 to change firms, how does BoA expect to keep assets...excuse me, representatives...at the firm? Sure, they are loyal to Mother Merrill, but this deal, a reported 1x trailing 12 for a top producer is going to be a problem.

Sure, getting 1x trailing 12 to change firms is huge.....well, it was huge at one point in time. My firm has been working on deals in excess of 2x trailing 12. Certainly Merrill is, or was, a great firm, its brokers are, for the most part happy, and at least in my limited experience, and Merrill has, or had, a lot going for it.

But when BoA starts offering less than one times for a million dollar producer to stay at the firm, and others are offering him more than twice that to leave, there is going to be a defection.

The problem is, at least from my outside perspective, the same one that has existed ever since banks got into the brokerage business. Bankers are not brokers, and bankers just don't understand the brokerage business. This issue seems to be pretty straight forward, but maybe not.

Great quote from the article:

"What happens is that everybody who makes $499,000 to $1 million is now in play," says an advisor who generates $750,000 in production. "The message being sent is bankers versus brokers. Commercial bankers don't understand what advisors do. At other firms, a guy who makes $750,000 to $800,000 is valued by the firm."

Not so at Merrill, but other firms will value them.

Others are offering that producer TWO MILLION DOLLARS to leave Merrill.

Merrill Retention Is Adequate for Top Dogs, Scanty for Lower-Tier Producers"

Goldman to slash 10% of staff

Many were looking to Goldman Sachs as the model of financial industry stability in these troubling times. Well, it looks like all may not be so rosy on Broad Street after all - Goldman to slash 10% of staff: "The Goldman Sachs Group Inc. is preparing to cut 10% of its work force, or 3,260 workers, according to a source people familiar with the matter."

Raymond James snags high-earning Merrill team

Raymond James snags high-earning Merrill team: "A veteran Michigan-based brokerage team at Merrill Lynch & Co. Inc. that produces $2.7 million in fees and commissions has bolted to Raymond James & Associates Inc., saying its clients are concerned about the financial stability of Merrill."

Regulators look for signs of manipulation near market close

Regulators look for signs of manipulation near market close - "U.S. securities regulators are trying to find out whether firms using the 'marking the close' technique are contributing to explosive volatility on stock markets near the close of trading. The Financial Industry Regulatory Authority said it was taking 'an extra close look' at the situation."

Cox Strongly Supports Merger Between SEC and CFTC

Of course he does - with him as the head of the new entity, no doubt. After all, he did such a great job with the SEC. Cox 'strongly' supports merger between SEC, CFTC - "Christopher Cox, chairman of the Securities and Exchange Commission, said a committee on regulatory reform of the financial-services industry should be established to explore a merger between the SEC and the Commodity Futures Trading Commission. 'It could tackle the challenge of merging the SEC and the CFTC, which I strongly support,' Cox testified at a congressional hearing. 'This would bring futures within the same general framework that currently governs economically similar securities.'"

Wall Street job losses could top 200,000

Wall Street Job Losses - Wall Street has already laid off 110,000 people in 2008 as a result of the financial crisis, and some experts see that number reaching 200,000 by the end of the year. Goldman Sachs Group said Thursday it would cut 3,200 jobs, or 10% of its work force. 'Wall Street the way we know it is, frankly, gone,' said Michael Williams, dean of the graduate school of business at Touro College in New York.

The fault, dear Brutus, is in ourselves

An editorial at Investment News raises the point that "Wall Street Greed" is not the cause of the current financial crisis, although it is the current poster boy according to politicians.

Of course, it is always easier to blame someone else, but this article points out that we, the guy in the street, are partly responsible for this crisis.

The fault, dear Brutus, is in ourselves - InvestmentNews

Firms Report More Losses

As expected, the brokerage firms continue to report losses:

Raymond James Q4 Net Drops 22%

Merrill Posts $5.2 Billion Loss, Fifth In A Row

Financial Rescues Can Set Off New Problems

An interesting analysis of the unintended consequences of the financial bailout from the Washington Post.

Financial Rescues Can Set Off New Problems