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F Disrespectful Fiduciary Responsibility

According to published reports
1 Comment| May 7, 2021

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Concerned under the existential dread that "The robots could take over" and take control of the job of writer as easily as they did to that of the cashier or comedian, I attempted to create an article via an AI algoritm, the result ....

There has been a lot of talk in the financial and investment media about US chambers of commerce suing banks for alleged sums of money in their possession. All seemingly in a bid to get government stimulus money back into the economy. At issue is the valuation of securities and lack of regulation.


US chamber of commerce v Banks:

The most recent case is Bank of America v Merrit Control BK,ilateral Services, Inc, (organization chartered by the state of California). In the decision, Bank of America stated "the only collateral is the company-that is, its real and tangible property and the assets it has accumulated. The company's redeemable debt is limited to the fair market value of its assets, i.e., their acquisition price." There was also Warren Buffett, the largest shareholder and operator of Berkshire Hathaway, filing a lawsuit against Citigroup in an attempt to return stock, valued at approximately $24 billion. In 2004, Buffett "purchased" 18.4 million shares. In the lawsuit, Buffett stated in reference to Citigroup: "It was clear to me that they (Citigroup) was capable of either buying the securities at a price many times less than what they had paid or simply securitizing them." This was in response to Citibank's transfer options, chapter 11, to a special purpose entity (SPE) which was designed to avoid the tax liabilities that would result from the reorganization of that entity.


They’re not alone:

There are many other corporations filing lawsuits who may be attempting to sue if this eventually materializes. These include American Express in 2005, McDonald's in 2006, and the fallout of the Enron investigation in 2002.


Corporate purpose and the right to due diligence:

This is possible on an individual level and it involves seeking the guidance of your investment professional. Many of these individuals are not ready or willing to release their portfolios to the public. Some of them do but do so in consultation with their trusted financial advisors.

Establishing your S.pubs is a process that would be handled by an investment professional. Operation of the longer-term portfolios are often done mechanically, that is, when they are purchased, or a buy offer is created on the investment brokerage's platform. If you were a friend of the investment professional at the time, it is likely he would want to maintain a position in the portfolio. It is possible to establish a portfolio with the investment professional's input including the purchase or sale of the investment and the ultimate control of a investment portfolio through Employee Stock Ownership Plans or defined benefit pension. There are many legal steps that have to be taken, which the professional guide will help to explain to you. In addition, your trust fund manager will likely offer you regular 401k deferral options and investment options. These are important because, by definition, your 401k is pre tax dollars taken out of your pay check. If you are fortunate enough to get a lump sum from an insurance settlement, or if you win a court settlement, these monies should be invested in ways which provide tax benefits. It is rare to find a good, tax optimized 401k fund, but there is a wealth of options, including IRA funds, and variable annuities.


Is it really that bad?

Don’t get me wrong, personal injury lawsuits do not tend to make the waves of the financial markets and the implementation of venue laws in personal injury cases have become a problem in many areas of the country. These laws are in place for the benefit of specific individuals. Take for example that of the defamation rules which must be applied in many jurisdictions in the USA. Establishing litigation support services to such individuals put the attorneys and the broker's fees way out of the window. Thus forcing them to charge more to get the same result. This is a recipe for financial disaster for all involved.


For a better result ….

A plan of action should be devised to ensure that lawsuit funding is not occurring offshore by Family Trusts or Non-Family Limited Partnerships which can offer the non-recourse element of this type of litigation funding. Such structures usually choose the protection and liquidity of the investor's assets, while the objectives of the injured party and his family are also protected. In contrast, if the injured party provide his investor with signature authority and retain control of the equity in a lawsuit funding structure, it clearly would not be in the best interests of the other party in the case. If you are going to invest in anything please make sure it is done so in your limited capacity with an investment professional who can guide you correctly. Never look to your investor to adequately handle such a risk which will inevitably hound you at some point or another.



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