The perception "that there might be something wrong with the company" is a bit more than perception!
Wall Street Employees Lose $2 Billion in 401(k) Bet on Own Firms
By Michael J. Moore - SFGate
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Shares of the largest banks dropped in 2011 as trading plummeted late in the year and the firms faced concern that the European debt crisis would hurt U.S. investment banks. Bank of America responded by announcing plans to cut 30,000 jobs, Goldman Sachs reduced discretionary pay by more than 26 percent, and Morgan Stanley capped cash bonuses at $125,000.Goldman Sachs shares fell 46 percent, and the value of the bank’s stock held in 401(k) accounts fell to $61 million from $104 million. Citigroup shares dropped 44 percent, and those of JPMorgan, the largest U.S. bank by assets, decreased 22 percent.While JPMorgan didn’t provide a figure in the fund’s annual report, the total value of the bank’s stock held in employees’ 401(k) plans fell more than $500 million last year. The plans bought more of the stock than they sold during 2011, according to the report. Employees received about $51 million in dividends from the shares.Citigroup, the third-largest U.S. bank, also didn’t specify a 2011 loss tied to its own shares. The value of its stock held in employee retirement plans, accounting for purchases and sales as well as paper losses, dropped $317 million during the year, according to an annual filing. That leaves Citigroup stock held in the plans down about $1.1 billion from the price at which they Swere purchased, according to the filing.
Employees typically hold the shares as long-term investments, and the losses aren’t realized unless the stock is sold. Still, financial workers are receiving more of their pay in stock. Bank of America paid traders and investment bankers who earned between $100,000 and $1 million for 2011 at least 80 percent of their bonus in company shares, people familiar with the matter said earlier this year.
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