In the business section of Sunday's Times was another one of these articles. The point of the article was that arbitration panels in business disputes can have members with obvious and glaring conflicts of interest that are not generally disclosed. In the case at hand, a panel chair chosen to represent the public (rather than the business being sued) turns out to work for the law firm that represents the business being sued and in fact had once actually defended them in court. Yeah, that's not a good thing, and I do sympathize with the plaintiff here.
But this is how the story begins:
When Harley C. McDonald, a retired lawyer for a Nebraska construction company, lost 80 percent of his $60 million stock market nest egg, he lost faith in the brokerage industry.
Wow -- this guy lost 48 million dollars because of bad brokerage advice! That's terrible.
But wait. How did this guy get 60 million dollars in the first place? That's a lot of money. And how did he lose so much? That's certainly careless. That brokerage house must have done terrible terrible things to him!
Oh, well actually the story is that when this guy retired from his job as a corporate attorney (at the age of 53!) he got shares in the company he'd worked for that were worth six million dollars. He didn't save 6 million, he didn't invest his way up to 6 million, he simply got six f-ing million dollars in 1993 because he worked for the right company. Yeah, yeah, I know -- that's how things work, and he "chose" to work for that company, and that was part of his "compensation". But I've been in the business world enough to know that whether you get six million dollars simply for working for a particular company or nothing at all because your company goes bankrupt has nothing at all to do with you. It's fate and whim and luck. Ok, that's the world. I'm not advocating here and now for socialist overthrow. But I don't start out with much sympathy for this guy's economic distress. Sorry. I'm just mean.
What happened was that the stock he got eventually became stock in Level 3 Communications and Worldcom. How it "eventually became" stock in only two companies is never explained in the article, but all of the shares were in those two companies. He opened a brokerage account to help him take care of the money. And those stocks zoomed up -- to be worth 60 million dollars. Then they crashed, although not before he had cashed out twelve million dollars. (His complaint is that the brokerage people should have told him to diversify.)
So let me get this straight -- his six million dollars in stock compensation got him 12 million in 8 years, entirely because of the inflated booming prices of two companies -- and we're supposed to have sympathy because he didn't get the 60 million that he thought he was worth at one point -- because his brokers didn't encourage him to diversify?
I think he did pretty well in 8 years, myself. I think he found himself an extremely fortunate man and then even more fortunate when he invested at a time when telecommunications companies were shafting most of the rest of us. I think he should take his free 12 million dollars and go home.
So yeah, the arbitration system has problems. And gosh, brokerages that rode the dot.com boom could have been better about protecting their clients when things went bust. I have no legal proposals here.
But I have no sympathy for this guy's plight. That's my point.
I am so very, very mean.