Investors Picket Great Western Financial
Great Western Financial Corp., trying to shake a problem that is more clingy than a sleeve full of burrs, found its annual meeting picketed Tuesday for the second straight year by elderly protesters who claim the company fast-talked them into bad investments in mutual funds.
The situation remains a bad public-image headache for Great Western, the parent of Great Western Bank, the nation’s second-largest savings and loan, which is struggling to focus attention on a new management team and improving financial results.
For example, Great Western on Tuesday raised its dividend for the first time since 1992, to 25 cents a quarter from 23 cents.
But the two dozen protesters, with their handwritten signs and their stories of loss and deceit, held the spotlight Tuesday, attracting television and print reporters who might otherwise have ignored a routine annual shareholders’ gathering at Great Western’s Chatsworth headquarters.
A typical story is that of Philip Warren of Northridge, a retired construction worker who said he was talked into shifting $65,000 of his nest egg away from a federally insured account and into a mutual fund that lost him nearly $8,000.
“In seconds, they knew I was illiterate about finances,” Warren said of the employees of Great Western’s brokerage unit who sold him the investment.
A number of the protesters are plaintiffs in pending state and federal lawsuits. Some said their goal is to pressure Great Western into settling the suits and reimbursing them for money they lost on their investments or paid Great Western in mutual fund fees.
Great Western, while denying wrongdoing, has held settlement discussions with the plaintiffs. Company officials say they would like to rebut the charges in detail but are constrained from doing so while the suits are being contested.
Similarly, Great Western disclosed last fall that its mutual fund business is the subject of an inquiry by the Securities and Exchange Commission, but it declined to provide any details on the scope of the inquiry. A spokesman said Great Western is cooperating with the inquiry. The SEC also declined comment Tuesday.
The dispute has also hurt Great Western’s mutual fund business, one of the largest such enterprises at a U.S. financial institution, with more than 200,000 accounts and $3.3 billion of assets under management.
After explosive growth through its first five years, the operation has stalled lately, partly because of a disastrous year for the bond market in 1994 and partly because of the black eye from the lawsuits, the Great Western spokesman acknowledged.
