Stock Shares??SUE??Need your advice????

Question

Henry Budget is a research analyst at Goldman & Silverman, a premier Wall Street investment bank. His area of expertise is the technology industry and one of the companies he covers is Pink Hat Software Inc. Just before Pink Hat was about to hit the market with an IPO in January 2000, Budget issued a research report stating that the company had excellent business prospects and that the IPO would be oversubscribed. He rated it a "Strong Buy." A few days after that Budget exchanged a series of emails with his colleagues at Goldman & Silverman, disparaging Pink Hat and in one of the emails he wrote (before the shares were issued) that "Pink Hat's shares can be used as toilet paper." Joe Pensioner, a former auto worker invested his retirement funds in Pink Hat after reading Budget's report at the then price of $256.25 per share. It is currently trading at $3.75. Joe Pensioner wants to sue Budget and Goldman. Will he succeed?

Answer 1

haven't you ever seen the disclaimers that banks have?

investing involves risk, including the potential loss of investment capital, and whatnot.

if i'm on the jury, joe pensioner is out of luck.

Answer 2

nah, it is an opinioon

Answer 3

Many did win with similar situations.

BUT there has to be a reason that an analyst would give a glowing report to a company that he thought was bad. There would need to be financial reason he would "sell out" like that.

IF you can show he gave the report for reasons other than that was his true opinion, even if we know it was not, then yes you can win. Then it basically becomes fraud.

But proving the intent is very difficult and you would also have to prove that his report was the reason the investor bought.

And unless the Joe Pensioner was a client of the bank and they were advising him on his investments, that would be near impossible to prove he bought because of the bad advice and he is out of luck.

Answer 4

Maybe, did he pay for the advice, is there evidence of fraud.