Investments

Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley's high-tech mutual funds of making biased stock picks.

Bank Of America Investment Recent lawsuits allege the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment banking fees - or could potentially bring big business - to the investment bank.

Investment Opportunity According to the lawsuits, the Morgan Stanley fund followed the biased recommendations of the firm's analysts - decisions that have cost shareholders millions of dollars since the portfolio's October 2000 inception.

2. Conflicts of interests Employees should seek to avoid any action or interest that conflicts with the Company's interests. A conflict of interest exists where the interests or benefits of one person or entity conflict or appear to conflict with the interests or benefits of the Company. While it is not possible to describe every situation in which a conflict of interest may arise, Employees must never use or attempt to use their position with the Company to obtain improper personal benefits.

Banc Of America Investment The fund lost 48 percent in 2001 and was down another 50 percent during the first nine months of 2002. While Morgan Stanley strongly denied the allegations, I fail to see how the management of the fund is somehow distinct from the other divisions of Morgan Stanley. Ultimately, they all work for the same boss.

All Senior Financial Officers have an obligation to act in the best interest of the Company, and should avoid any situation that presents an actual or potential conflict between their personal interests and the interests of Campbell. A Senior Financial Officer has a conflict of interest when his or her personal interests, relationships or activities, or those of a member of his or her immediate family, interfere or conflict, or even appear to interfere or conflict, with Campbell’s interests. A conflict of interest can arise when a Senior Financial Officer takes an action or has a personal interest that may adversely influence his or her objectivity or the exercise of sound, ethical business judgment. Conflicts of interest can also arise when a Senior Financial Officer, or a member of his or her immediate family, receives improper personal benefits as a result of his or her position at Campbell.

Banking Investment The suits further claim that the tech fund failed to disclose that the firm had investment banking ties with a number of companies whose stocks were part of the portfolio. They also failed to reveal that those links could affect the fund's buy or sell calls.

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Investment Solution Strategic Why bring all this up? For one thing, it is interesting to note that Morgan Stanley offered four of these types of funds in October 2000. Just around the time when we sold all of our positions (Oct. 13, 2000) and it became clear, at least to those of us who were tracking long-term trends, that a major trend change had taken place.

Would you not say that there is a conflict of interest here Why would any woman want to take horse estrogen or chemically imprecise, approved substances.

Investment Banking Services More recently in the news it's been Merrill Lynch who had a questionable deal involving transactions with failed energy trader Enron. Of course, the financial services industry regulates itself so well, that an $80 million payment to the SEC is sufficient to wrap up this case without admitting or denying wrongdoing.

Bank Investment What's the moral of this story? While it is impossible to predict these alleged conflict of interest schemes, it is definitely possible to follow a disciplined approach and be on the "right" side of the market so you can avoid jumping aboard a sinking ship.

Alternative Investment

Online Investment Services Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com.

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