Archive for March, 2008

Don’t Get Zapped

Monday, March 31st, 2008

Read Randall Sullivan’s story in this month’s issued of WIRED magazine about how insiders of an electric automobile company-ZAP, Inc.-enriched themselves while leaving a wake of angry investors and dealership owners.  Do not consider investing in any green technology company before you have read Sullivan’s story.    

Tell Me Again Why ‘It Could Never Happen to You’

Saturday, March 29th, 2008

According to the Wall Street Journal, Lehman Brothers may have been defrauded in a $250 million swindle worthy of The Sting or The Spanish Prisoner.  At the center of the swindle are loans that Lehman made to a fund run by a medical consulting company owned by LTT Bio-Pharma Co.-a Japanese bio-tech company.  As security for those loans, Lehman believed that it received certificates from Marubeni Corp., one of Japan’s biggest trading companies.  Marubeni says otherwise.   (more…)

“Who Are All These Suckers?”

Friday, March 28th, 2008

Think of the most credible person you know.  Maybe it’s a friend with an impressive resume.  Maybe it’s a professor from college, or someone who has proven to you that he or she can keep a secret.  Maybe it’s a parent or sibling.  If that person approaches you with an investment opportunity that includes an absolute guarantee of safety coupled with an attractive rate of return, will you consider investing?  Suppose your friend tells you that he has received a return of 2% per month for that past 12 months?  Will you consider investing?  Of course you will.  You’ll at least consider it. (more…)

Market Takes the Mask Off of Broker Misconduct

Thursday, March 27th, 2008

Investor claims are picking up.  From the baby boomer who lost 20% when his supposedly safe short term bond fund took a dive in the wake of the sub-prime debacle, to the senior citizen who is learning that the variable annuity she bought at retirement on the advice of a broker recommended by her company was the worst possible investment, investors are waking up to misconduct that has been camouflaged by a generally rising market over the past five years.  (more…)

Grow the SEC

Wednesday, March 26th, 2008

Yesterday’s Wall Street Journal bore a front page headline-”Political Pendulum Swings Toward Stricter Regulation.”  The article talked about how enforcement of current regulations failed to prevent everything from the sub-prime mortgage debacle to lead paint on toys.  While the Congress is in a regulatory mood, let’s hope they strengthen and grow the Securities and Exchange Commission. (more…)

What You’re Up Against

Tuesday, March 25th, 2008

U.S. and international law enforcement authorities have announced arrests in a securities con that spanned two continents.  The sophistication of the scam reveals the mismatch that exists when any investor-no matter how knowledgeable-attempts to evaluate a broker or investment opportunity alone. (more…)

Suburban Seattle Man Sentenced for Scam

Monday, March 24th, 2008

Joseph Lavin of Woodinville, Washington told investors in his company-Global Asset Partners-that they would earn returns of more than 30 percent per year through his investments in foreign-currency exchange options.  Many of them instead suffered 100 percent losses when Lavin’s investment turned out to be a Ponzi scheme.  In total, Lavin defrauded 176 investors out of more than $13 million over a nearly six year period from January 2001 to November 2006.  Last week a judge sentenced him to 4.5 years in prison. (more…)

SEC Basketball Ref Fouls Out

Sunday, March 23rd, 2008

Travis Correll wore the zebra shirt of a college basketball referee, working games in the Southeastern Conference (SEC).  When not officiating basketball games, he ran a prime bank scam that collected more than $29 million from hundreds of investors nationwide, before the other SEC-the Securities and Exchange Commission-shut the scheme down in December 2005.   (more…)

Our Most Vulnerable

Friday, March 21st, 2008

I was visiting yesterday with a friend at the SEC after teaching the SEC’s interns about insider trading.  My friend shared with me that his father is prone to fall for financial scams, and that only constant warning from my friend keeps him from falling for more of them. Now, this is a man whose son has spent his career protecting investors from financial scams, and yet he still finds the sales pitches compelling. What’s going on here?  How is this even possible?   My friend put his finger on the primary reason why senior citizens so often fall for financial scams.  “They are lonely,” he said.  (more…)

Market’s Rollercoaster Ride Likely to Expose Broker Misconduct

Thursday, March 20th, 2008

Times were good for quite awhile.  Every month when you opened your brokerage account statement, you looked at the figure at the bottom and saw that it was more than it had been the previous month.  If you are like most investors, you did little else to evaluate whether your broker had served your interests that month.  (more…)