World-Class Trustor, Unlucky Investor

How many trusts does a member of the Forbes 400 need? About 25, according to this article (subscribers) in The Wall Street Journal.

Some trusts set up for Fred DeLuca, co-founder of the Subway sandwich shops, were established offshore, in locales such as Lichtenstein, Isle of Man and Guernsey.

The trusts' investments seem to have been managed right here in the U.S.A., via five trustees and a broker at UBS. Unfortunately, the trusts were victimized by the dot.com bust, plus untimely bets on a couple of health-care stocks.

Recently, a three-person National Association of Securities Dealers arbitration panel rejected claims that UBS had mismanaged the trusts. Says the WSJ:

The case opens a rare window into arbitration claims by wealthy individuals against their brokers, showing how difficult it can be for them to recover losses from Wall Street brokerages. As is often the case with arbitration awards, the panel didn't give reasons for its decision. But rich people have a tough time winning claims, because they tend to know a lot about how the stock market works and as a result don't get a lot of sympathy when they do cry foul.

How tough? A lawyer for the trusts notes that last year, 148 claims for more than $1 million went to arbitration. More than 60% were "dismissed in their entirety."