Sense on Cents

To this point in our economic crisis, Wall Street and Washington have utilized the ‘perfect storm’ excuse to cover themselves from investors’ cries of negligence, incompetence, and potentially corruption. Despite those cries, America has seen few, if any, credible and comprehensive legal complaints brought on behalf of investors. Select investor suits have largely been adjudicated on behalf of the defendants, those being Wall Street banks and brokers, under the mantle that sophisticated investors are responsible for all investment analysis and live with the consequences. Will Wall Street always be accorded the cover of ‘caveat emptor’? If so, then our markets are a much riskier proposition than most investors would appreciate.

I have been surprised to this point that more investors have not filed suit against Wall Street banks for willful and wanton misrepresentation of risks in the underwriting of an array of securities. Well, I am surprised no longer as a large mortgage investor, Cambridge Place Investment Management based in Concord, MA, recently dropped a napalm bomb on Wall Street. (more…)