How Will Neuberger Sale Affect Mutual Funds?

New York, NYNow that the dust has settled and Lehman Brothers' Neuberger Berman group has been sold, investors are left wondering what effect the sale will have on their mutual funds. While Neuberger officials say that Neuberger mutual funds and other investments are stable, investors are left to wonder if that really is the case, or if they are just being handed another line.

It has been a few months of uncertainty for investors, who have watched their investments drop dramatically. One of the major questions in the financial industry was what would happen to Neuberger Berman. It turns out the investment bank was won by senior level Neuberger employees at an auction. The company will be renamed Neuberger Investment Management and will be a standalone company. The deal will likely close in early 2009.

The new company will have approximately $160 billion in assets. The management team that purchased Neuberger will own 51 percent of the company, while the Lehman estate will own 49 percent. The managers have said that business will continue to run as usual for Neuberger. However, investors are left to wait and see what will happen to their mutual funds in the wake of the purchase of Neuberger.

While investors consider what action to take, they must also consider what to do about their mutual funds. Is it safer to leave the money in and see if things can turn around, or should they take the money out and try to invest it elsewhere? The market is bad everywhere, but, if they leave their money in, will they make back any of their losses?

Of course, the worst thing that investors can do is panic. The problem is that when they see their investments losing value—losing a lot of value—they worry, and that is understandable. However, there are many other financial firms and investments losing money, as well. So where is the investor to turn?

One question that must be answered is whether Neuberger is in its current position because of mismanagement. If so, and if managers failed to act in the best interests of their investors, then the investors may be eligible to file FINRA claims against the company and its managers for breach of fiduciary duty.

If they believe that there has been a breach on the part of the financial managers, then they can turn to FINRA to file an arbitration claim. While the claim is not guaranteed to get them their money back, it is one option for investors who feel they have nowhere to turn.