Practice Areas > Investor Protection & Corporate Governance

Fraudulent practices in some of the world's largest corporations are frequently reported. Worldcom's understatement of earnings by eight million dollars and Enron's concealment of losses in "partnerships" are two of the most notable. Unfortunately, they are not the only ones.

Shareholders suffer major loses from this conduct. And who are the shareholders? They are individuals, endowments, universities, pension plans, state and local governments - - all persons and entities attempting through their investments to safeguard their principal while earning a rate of return to increase their wealth and, most importantly, enhance the financial well-being of their beneficiaries. In recent months, as our markets have collapsed, a number of frauds have been exposed, such as the Bernard Madoff and Sir Allen Stanford ponzi schemes. With the press for cash and demands for the return of capital, other schemes will undoubtedly rise to the surface and reveal themselves. Still others will remain hidden. All of these frauds have caught our attention, individually and as a firm.

Investors rely on honest corporate governance and full disclosure of all relevant material facts when deciding how much and what to invest, and where. Unfortunately, as the kimono has been lifted on our collapsing economy, we have learned that the lack of regulation and oversight that accelerated over the past eight years led to corrupt corporate leadership and the utter lack of transparency of the risks of significant investments; repeated securitization of the same bad investments; and an overall culture that disregarded the maxim that if it sounds to good to be true, it probably is.

Mortgage backed securities; auction rates securities; credit swaps; derivative swaps; overextended securities lending programs - - these are the remnants of an investment and banking community that disregarded risk in favor of their own fast profits. The results are obvious and well-known: Our country's wealth has been cut in half, which means funds available to pension plan beneficiaries have been cut in half; funds available to endowments and the people who benefit from them have been cut in half; investments of universities that are used to further the education of our populous have been cut in half; and the funds of state and local governments, which are used to pay for and provide benefits to employees and provide services to our citizens have been cut in half.

Wexler Wallace is helping pension plans, governments and others in need to recover assets lost in the shattered market, funds that never would have been invested if the securities' underlying weaknesses been known. For example, Wexler Wallace has been advising financial planners, pension plans and governmental entities stung by the loss of cash collateral obtained through overextended and overexposed securities lending programs mangled by custodial banks. Through its membership in the National Association of State Treasurers, and its increased involvement in institutional finance and investment conferences, Wexler Wallace has catapulted itself to the forefront of seeking redress and the recovery of assets lost in recent months through the gross negligence and the breaches of fiduciary duties owed by those in whom institutional investors placed their trust and confidence.

Wexler Wallace is committed to ensuring that all investors, whether large institutions or private individuals, have access to important accurate facts that affect decisions about their investments, and thus the firm has pursued cases where companies have failed to provide material information or have misled investors. Wexler Wallace is also dedicated to protecting employees whose retirement investments where mismanaged by failure to operate the retirement plan for the "exclusive purpose" of providing benefits to retirement plan participants or their beneficiaries, or engaging in other ERISA prohibited transactions with retirement plan assets. It is important to note that retirement investments must be appropriately managed by any named fiduciary of the plan, which means that liability for mismanagement can extend to third parties undertaking that responsibility (such as custodial banks); fiduciary duties are not necessarily the sole province of pension plan trustees. Pension plan trustees must take a second look, therefore, at who they have named as planned fiduciaries for investment purposes and determine whether those fiduciaries fulfilled their responsibilities to the plan and its beneficiaries.

Similarly, management at a public company has a duty to act with loyalty, candor and in the best interest of the corporation's shareholders. Often, however, in an effort to show continued growth, management forsakes these duties, resulting in a short-term fix of the company's problems that ultimately results in a disastrous effect on share prices and shareholder interests. Look at the stock market today. Need we say more?

In addition to recovering damages for defrauded investors, securities fraud lawsuits also result in changes to corporate governance and policies designed to prevent future misconduct. The importance of this cannot be overstated. Corporate officers and directors have the highest responsibility of full disclosure and transparency to those buying and selling their securities. Wexler Wallace seeks to ensure that these persons fulfill their responsibilities and that our capital markets truly reflect the accurate information that should underlie every commercial transaction.

Securities Lending by Pension Funds, White Paper by Ken Wexler

Who does Wexler Wallace currently represent?

For further information please contact Ken Wexler.