Microsoft Employee Gets Over $220k for Bad Investment Advice

January 27, 2005 (PLANSPONSOR.com) - A Microsoft employee has won a victory against UBS/PaineWebber over the quality of investment advice the employee received from the Wall Street firm.

The participant in the stock option plan won a total of $237,338, which is the amount that could have been saved if UBS had implemented a hedging strategy known as a “zero cost collar” for the participant’s investment in Microsoft stock, according to a press release from the participant’s law firm.

A “zero cost” collar is the sale of call options, and, with the proceeds from the sale, the purchase of put options. This creates a range of value – or a “collar” – that a portfolio can maintain, despite possible fluctuations in a stock’s value.

Law firm Klayman & Toskes ( www.nasd-law.com ) has suits pending against other Wall Street firms on behalf of other Microsoft employees. Lawsuits have been filed on behalf of participants in the Microsoft plan seeking compensatory damages of $12,613,860 against Merrill Lynch, Pierce, Fenner & Smith, Inc. for alleged unlawful conduct at its Seattle and Bellevue, Washington branch offices. (See Microsoft Option Plan Participants Sue Merrill Lynch ).

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