CCOs Held Accountable For Regulatory Misconducts

Just like with the CEO and CFO, if the CCO is found to have been negligent, they should be held accountable for their mistakes.

The Journal for Practical Compliance and Risk Management for the Securities Industry (PCRMSI) recently printed an article entitled “The Girl with the SEC/FINRA Tattoo: Disciplinary Actions Taken Against Chief Compliance Officers (November 2010-June 2011)” in which they detailed recent regulatory actions taken against Chief Compliance Officers (CCO) of various firms.


Tagged with:

Charitable Gift Annuity Fraud

Sometimes even the most reputable looking investments, in this case a charity, is using deceptive tactics to entice investors

According to a press release by the Securities and Exchange Commission in February, 2012, a husband and wife team have been charged with defrauding seniors by selling charitable gift annuities, when in fact only a small amount was directed to the charities, and the rest went to paying high salaries and third-party commissions.


Bond Funds: A Bubble Ready to Burst?

Investors are either not being told about the risks or not fully appreciating the risks.

Many fixed income investors, desperate for yield, are putting their hard-earned savings in bond funds that offer attractive total returns and yields but carry significant risk.  Virtually all the experts observe that both the corporate and municipal bond markets are in a bubble that will inevitably burst and destroy many investors’ savings.  The SEC has stepped up efforts to educate investors about the perils of bonds and bond funds, which have traditionally been regarded as relatively low risk.  The clear message is: that is no longer the case. (more…)

Tagged with:

Study Confirms Most Investors Know Little About Investments

“”U.S. retail investors lack basic financial literacy … have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud.”

A recent study by the SEC concluded that most investors understand very little about the financial investments they buy. Following the financial crisis, Congress suspected that the financial illiteracy of investors played a role in the crisis and directed the SEC to conduct a study on the subject.  The SEC has completed its study and issued its report; the findings are indeed shocking. (more…)

Tagged with:

The “.44 Magnum Investment” Fraud

“[H]e named the program accordingly because “when people found out they’d been ripped off, they would buy a .44 Magnum and shoot themselves in the head.”

Another investment con and more personal tragedies that could have been prevented have occurred.  This time the SEC has charged Geoffrey H. Lunn of Sheridan, Colorado with operating a $5.77 million investment scheme with marketing assistance from Darlene A. Bishop of Odessa, Texas, and Vincent G. Curry of Las Vegas.  Lunn falsely told investors that he was vice president of a firm whose executives had connections to Dresdner Bank. The fictitious firm, Dresdner Financial, with a name similar to a Dresdner Bank, a legitimate bank, apparently gave Lunn an aura of credibility with investors. (more…)

Get In the Game

It will cause so much devastation in the months and years to come that it will make us forget Bernie Madoff.

I’ve been warning for the last several years about the tsunami of investment fraud currently sweeping around the globe. It’s already cost baby boomers, senior citizens, pension funds, college endowments, and other investors more than $100 billion and will cause so much devastation in the months and years to come that it will make us forget Bernie Madoff. Having warned you as best I can through this blog, speeches, and The Vigilant Investor, I’ve decided that the best place for me in this battle is back at the SEC, where I first caught the investor protection bug.  On Monday I begin work as a Senior Trial Counsel in the SEC’s Atlanta Office. Knowing the caliber of people in that office as I do, I have never been so excited to start a job. I pray that those of you who have followed this blog and who have put yourselves through the training to become vigilant investors, will contact me when you discover an ongoing fraud.  My new email address will be [email protected]. (more…)

The One Phone Call You Must Make

You’ll never realize that your money is at risk until it is far too late to recover it.

I have been swimming in an ocean of fraud and fraudsters for the past 22 years. It’s taught me some valuable things and unique approaches to protecting investors from frauds so clever that you’ll never realize that your money is at risk until it is far too late to recover it. The Vigilant Investor teaches those approaches. You don’t have to buy it (although it’s going on Amazon for just over $2 — The Wall Street Journal called is “a fascinating and valuable read” — and would make a great Christmas gift for your parents), but please pick it up at your local library. And please have your elderly parents read it. Hawking my book aside, though, just a day away from a big change in my career (stay tuned for tomorrow’s post), I have been thinking about what message I want to make certain comes through loud and clear; the one piece of advice I want you to remember if you remember nothing else. The following story sets it up. According to a recent SEC release: (more…)

A Tsunami Swamping the Globe

You are prone to the blindness that I’m talking about.

The tsunami of investment fraud that we’ve been warning about for four years is engulfing investors worldwide. This week we read about a large suspected Ponzi scheme in the Phillipines. According to Business Mirror: (more…)

How Do You Know?

It allows you to be a real hero at a time when heroes are in desperate need

There are far more of these characters than you realize; so many that you pass by several in your typical week.  Take a minute to read the story below, from a case by the Department of Justice. According a DOJ release: (more…)

Consider It A Dealbreaker

Please add this hard and fast rule to your investment toolbox.

Somewhere along the investing road, almost every investor comes across one piece of advice that is easy to remember and apply. I’m not talking about the nearly worthless axiom “If it sounds too good to be true, it probably is,” which has led more people to lose their nest eggs than all Bernie Madoff’s victims combined. I’m talking about good, solid pieces of sound advice, like, “Never write a check directly to your financial adviser.” From Connecticut comes a story that should provide another bullet in the savvy investor’s arsenal. According to ctpost.com: (more…)

Leaving the Past Behind

Unless you start there any investigation that you do likely will only set the scam artist’s hook deeper.

Earlier this week we posted about a scam in which one of the defendants used an alias to prevent vigilant investors from learning of his prior brushes with the law. We explained how changing identities is a common scam artist tactic and one that vigilant investors know how to combat. Today, from the SEC’s Miami office, comes another case of a scamster who decided to put his troubling reputation behind.  According to the SEC’s release: (more…)

Well Done, SEC

Did you know that the SEC generates far more than its annual budget?

One of the frustrating things about working in SEC Enforcement is that you often learn about huge investment scams only years down the road.  As long as the victims are satisfied — getting their promised checks and/or phony account statements on time — no one alerts the SEC to a potential problem.  So, it is very gratifying to find and stop a fraud before it has had a chance to collect its first million dollars.  The SEC has done so out in the Bay Area. According to the SEC’s release: (more…)

From the Bottomless Bag of Tricks

Notice three proven tactics that these defendants used.

Those who make their living by swindling investors aren’t “smash and grab” types. Generally, they devote time and resources into studying how best to separate people from their hard earned nest eggs. A recent case from the SEC’s Atlanta office offers a good example. According to the SEC’s release: (more…)

The Jed Clampett of Solar Energy

There is another energy sector scam that is pushing for its place in the energy scam pantheon.

There are so many oil and gas scams out there that we could launch a sister blog that covered nothing else. The profit potential of fossil fuels is long established and every investor dreams of becoming the next Jed Clampett. But there is another energy sector scam that is pushing for its place in the energy scam pantheon: the solar energy scam. This week the SEC filed an enforcement case that highlights the rise of such scams. According to the SEC’s release: (more…)

Another Insurance Salesman Gone Bad

The challenge is telling the good apples from the bad without taking a bite.

I don’t know what it is about insurance salesmen. It seems to me that there are more bad apples in that barrel than in most. I could sustain a separate blog dealing only with the bad conduct of insurance salesmen and how they lead thousands upon thousands of investors to financial ruin every single year. SEC Enforcement has recently commenced a case against another such specimen. According to the SEC’s release: (more…)

“Unprecedented Rise in Investment Fraud”

“If it sounds too good to be true . . .” is a pathetic excuse for wisdom.

For three years now, we’ve been warning that a tsunami of investment fraud is breaking over the investment community and that the destruction will make us forget Bernie Madoff. It turns out that federal prosecutors have come to the same conclusion. According to the Wall Street Journal: (more…)

Making a Killing at 42 Cents Per Share

That model is a one way ticket to penury.

How do you make a killing on a stock trading at 42 cents per share? Buy it for a penny a share. Millions of investors see that model as their ticket to financial freedom. They hope to buy the next Google for peanuts and ride it all the way to vast wealth. As a recent case from SEC Enforcement shows, though, that model is a one way ticket to penury. According to the SEC’s release: (more…)

Promissory Note Scam in Oregon

Promissory notes are the favorite vehicle for scam artists because they bear a couple indicia of reliability.

From Oregon comes another case involving the investment most likely to be involved in a Ponzi scheme — promissory notes.  According to the SEC release: (more…)

SEC Tags Portland Investment Adviser

Even advisers who are rotten to the core will give off a vibe that convinces you that you could trust them to baby sit.

Registered investment advisers (RIAs) like to point out that they owe a higher legal duty to their clients than do stockbrokers. And it is a valid point of distinction. Unfortunately, not all RIAs live up to that duty. According to the SEC’s release: (more…)

Mundane Motivations

The roots of most financial frauds reach into motivations with which we are all familiar.

Few people who end up as Ponzi scamsters set out to become infamous. None that I know of aspire to be despised and imprisoned. They set out with something else in mind. And oftentimes that something else is something that we’ve all desired: to make it through a difficult financial stretch. Who among us, besides the Mitt Romneys of the world, has not wondered how we are going to make it through a time in which our expenses far exceed our income? Today, from the UK, comes a story about how that very familiar feeling led one man to infamy. According to the UK’s Serious Fraud Office: (more…)

professional wordpress themes