by: Seth E. Lipner

Molly & Sam had been through a lot
They ran a small business, dummies they're not

They'd saved for years, and invested some too
In stocks, bonds and funds, mostly stuff that was blue

Retirement was coming, the kids' college was done
Molly played in the market, it seemed lots of fun

Sam handled the million, the money they'd saved
Invested conservatively, 8% they had made

Molly's friends had made bunches, she heard them all say,
And she had some hunches, but what would Sam say?

Then one day at lunch, her rich friend talked of trades
Molly's friend called her broker, a meeting arranged

She brought Sam along, he was doubtful but willing
He too heard of friends who had just made a killing

The broker had lots of nice graphs and a chart
He seemed honest and earnest, and showed lots of heart

He talked about tech stocks, dot coms, and who knows
Returns of 20%, and some nice IPOs

Not a word about risk did the broker ever utter
"Not to worry" he said, "I'll treat Molly like my mother"
- she thought he said "mother" actually, he said "mother-in-law"

They turned over the stocks, and the bonds were sold too
The first months were good, their net worth nicely grew

Then the next month, when the statement it came
They saw the word "margin", it seemed less than tame

Sam called the broker, who scoffed and said "poo!"
"It’s the way pros invest, I know more than you do."

Sam was still nervous, but Molly was sure
That the broker was brilliant, that his heart was still pure

Then August, September, October they came,
The market was dropping, it was no longer a game

They tried to hang in there, the market must rise
If more losses were coming, the broker’d advise

Then boom it came down, with calls and mailgram
the account went to zero, "oh my god" said old Sam

Now Sam drives a taxi in his spare time
Retirement is distant, he hasn't a dime

Molly she doesn't know quite what to do,
But she read in the paper that she might try to sue

Lots of these cases are being filed now
At the NASD, where agreements allow

So to arbitration they'll go,
To recover their losses
The firm will blame them
Say that they were the bosses

You'll have to decide who should take all the blame
For the account that imploded, for conduct insane

Was it the broker who urged them to trade?
Was it the friend and the referral she made?
Was it old Sam who feared it was risky?
Or was it poor Molly, who was a little too frisky?

There are lots of these cases you'll see later this year
And next year as well, the brokers do fear

You might see me there, on behalf of some person
Of this tech stock debacle, I'll tell you my version

Of unsuitable conduct, of duties they breached,
Of returns no sane broker would think could be reached

The brokers will say Sam and Molly knew better
They'll argue some law, and they'll cite every letter

But I blame the brokers, who egged on the trading
Who told Molly and Sam to risk their life savings
Who pretended that stocks never go down, not ever
Who said that the market would go up forever
Who talked about growth and forgot about income
Who never talked safety
or diversification
The brokers whose clients lost 50%,
or 60 or 70 - its horrible, but that's how it went

So how will we sort out this terrible mess?
Some say "mediation" will do it the best

Arbitrators will decide, we hope they’ll be fair
The victims of bull markets are in their care.

******

(The author is a professor of law, Zicklin School of Business, New York, N.Y.)
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