Updated: December 30, 2012 1:23AM
Dear Mr. Berko: When my dad passed away in early 2008, he left our children more than $420,000 in blue chip stocks, including AT&T, IBM, Procter & Gamble, Southern Co., Pfizer, Consolidated Edison, Morgan Stanley and ConocoPhillips, to name a few. Dad’s lawyer settled the estate, and seeing as we knew nothing about stocks and bonds, he recommended a stockbroker, who he said is the best there is and can help us with these stocks. We met with this broker, who owns his own firm. He is fee-based; he only charges 2.5 percent of the market value annually plus $9 commission per trade, which we thought was very low compared with the $50 to $125 per trade we paid when the account was at JPMorgan Chase. We liked him very much, so we had our lawyer move Dad’s stocks to our new broker in the winter of 2008.
I’ve sent you copies of the consolidated year-end statements, and as you can see, our children’s $420,000 is now worth $276,000, and we are devastated. We wish we had taken your advice four years ago when you told us to stay with JPMorgan Chase. Is there any way we could fix this quickly? We don’t want to tell our children what happened just yet. We spoke to the lawyer about this, and he said he wants to sue this broker for us. He wants us to pay him upfront expenses of $25,000, which he said we’d get back from the proceeds of the settlement. My husband doesn’t want to use this lawyer, because he’s the man who recommended the broker. However, I do because that lawyer recommended this broker and knows him, and I think he feels responsible and would do a better job. My husband has contacted another lawyer, but the second lawyer refuses to take sides.
— CS, Indianapolis
Dear CS: As I remember telling you four years ago: “Stay the course, because you don’t need any help with stocks such as AT&T, Apple, Southern, DuPont, Procter & Gamble, IBM and ConocoPhillips.” And I advise you to tell your two teenagers what happened ASAP. They have a right to know and perhaps a right to participate in your decision. And according to some legal precedents, your children may also have grounds to sue you! I applaud lawyer No. 2’s decision to refrain from telling nasty things about lawyer No. 1. But I think I know attorneys like lawyer No. 1, the slick blackguard who wants you to fork up $25,000 for expenses and costs. His cash demand is obscene, vulgar and humiliating. I reviewed the annual statements, and I’m certain as sunrise and sunset that your claim is so strong and compelling that most lawyers would willingly pay you for the privilege of suing that brokster. I checked on both of these fellows using Martindale-Hubbell and spoke with an impeccable personal source. Lawyer No. 1 doesn’t know borscht about securities law. However, lawyer No. 2 has a fine reputation in Indianapolis and has enjoyed good successes representing plaintiffs in securities arbitration cases over the years. I agree with your husband.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at email@example.com.