Fisher Investments Clients Filed Lawsuit and Arbitration Claim 05/27/2009

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Company Name(s): 
Fisher Investments
Case Name: 
Fisher Investments Clients Filed Lawsuit and Arbitration Claim 05/27/2009
Case Status: 
Lawsuit Filed
Lawsuit Overview
Type of Lawsuit: 
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At least one lawsuit and one securities fraud arbitration claim have been filed by Fisher Investments clients against Fisher Investments over losses suffered due to allegedly heavy investments in stocks, despite conservative investment objectives and evidence of an approaching bear market.

Fisher Investments is one of the largest registered firms of investment advisors in the United States, with nearly 38,000 client accounts and $28 billion in client assets. Founder and chief executive of Fisher Investments is Ken Fisher, who is known for his redoubtable marketing skills. During a presentation he made last month at an industry meeting in New York Mr. Fisher acknowledged that the financial services industry as a whole is likely to face an increasing number of legal claims in the aftermath of every bear market.. Mr. Fisher reportedly declined to comment about either the arbitration or the lawsuit, because that would violate the privacy of the clients but reportedly said that both “will run into a concrete wall”.

The lawsuit against Fisher Investments was filed by an investor this month in federal court in Houston to recover “significant losses” suffered by a living trust that the firm was managing since June 2008. “Upon the transfer of the trust’s investment account from Lighthouse to Fisher Investments, the asset allocation in the trust’s account was as follows: cash 27%, fixed income 32% and equities 41%,” the lawsuit states. “Fisher Investments recommended that [the investor] reallocate the trust’s portfolio to invest 100% in equities,” the suit states.

Previously an arbitration claim against Fisher Investments was filed in Atlanta on May 5 by a retired doctor and his wife, who alleged that they lost $1.2 million of their $2.5 million portfolio. Fisher Investments started handling the couple’s investments in 2007. They allege that Fisher Investments invested too much of their portfolio in stocks even with the market in free fall last year. The arbitration claim states that “as the market continued to plunge throughout 2008, there was one common theme from Fisher Investments: blind optimism and staying fully invested in equities”. The claim alleges that “despite overwhelming evidence of a bear market, Fisher Investments kept its elderly and retired clients almost 100% in equities”.

Thus both complaints contain similar allegations that Fisher Investments of Woodside, Calif., failed to protect the clients’ money before last year’s stock market collapse and that Fisher Investments’ financial advisors breached their fiduciary duty by failing to take steps to protect the conservative interests of the investors. Although signs had emerged of a pending stock market collapse, the client’s portfolios were almost exclusively invested in stocks. Reportedly lawyers expect that dozens of similar arbitration claims are likely to be filed against Fisher Investments in the coming months by other investors who have lost substantial sums of money due to alleged mismanagement and poor advice.