Forbes, "Hedge Hell"

          Alex Brown likes to steep itself in its two centuries of history, proud to have financed the nation's first water utilities and railroads. But two new lawsuits paint a disturbingly different picture of America's oldest investment bank, alleging fraud, mismanagement, inept options trading and conflicts of interest. Even more surprising is the source of the suits: several dozen executives at Yahoo, Ask Jeeves and other big-name firms.
          "Even the biggest fish in the pond can get screwed," says plaintiff Philip McKee, the former chief executive of TurboChef Technologies. "If they can do it to us, they can do it to anyone." Among the alleged screwees:Yahoo cofounder Jerry Yang (who put in $3 million); Bruce Toll, cofounder of homebuilder Toll Brothers ($1 million); former Ask Jeeves boss Roger Strauch ($1 million); and former Omnipoint chairman Douglas Smith ($3.7 million).
          In 1997 and 1998 some 170 highly sophisticated investors, many of them techies flush with soaring stock options, put $286 million in stock into two so-called exchange funds. The funds are designed to let execs diversify beyond their own company stock--and dump insider shares without full disclosure or having to pay taxes on any gains. But the clients lost hundreds of millions of dollars, the suits claim,when the two funds bet wrong as tech stocks rocketed up in 1999, then bet wrong again when the market fell.
          Note: Lieff Cabraser represents the plaintiffs in this litigation. To learn more about the cases, click here.