To be the Devil's Advocate in the matter:
I can garantee a 7% return on any money you give to me, just by setting up a mutual fund right. The right stock mix, you'll make WAAAY more than that, even in a BAD year (like 2007-2011). And, that's just ONE way I could. I could make triple that doing options plays, or setting up complex dirv.
But, a lot of it depends on people staying the course. I realize these firms are required to maintain a certain division bewteen their clients' interests (risky investments vs. conservative), but they're usually dumping the money together to achive their results. Why invest 10k into a moneymaker, when you can invest 100mil, and make more? It may seem stupid, but if you have a client wanting to pull, say, 10mil out of your firm, unwinding becomes scary. If you hold 100 shares, can sell them at market pretty quick and easy; try sell 150,000 at the EXACT same price, without the markets blinking. Someone dumps 150,000 shares of GOOG, it'll be absorbed; someone dumps 150,000 of some mid-cap company only a few know of, the markets may think the bottom is falling out of the company. If enough clients cash out at the same time, it's like a run on the banks in the 1910s; everyone loses.
The stock markets work because people tend to hold stuff for a while, waiting for it to go up. Liquidating millions (or billions) of dollars in positions requires someone to BUY those shares, in order for YOU to get the money. And, if an institutional investor sees you start dumping shares (in signifiant quantities), they'll short you (I would!), pick up those shares DIRT cheap, and basically earn the money you were expecting to. So, you get slapped coming and going:
1) You lose the customer,
2) You lose their money or, at least, lose most of what you earned with it cashing them out, leaving you shorter margins on the clients you have,
3) You lose the position that might have made you more money than you're losing,
4) You damage your rep, if you don't find a way to make good on your promise.
I doubt this method of information suppression (a lawsuit) will work; if conventional news outlets hear about this, then it will be over (assuming they will, or they care). And all of their worst nightmares will be sweet dreams, compared to the reality that could ensue. They must feel they have more to gain, than they'll likely lose, by trying this. Time will bear out what the outcome will be.
