Stephen Hochberg of Sudbury, Massachusetts was an accountant-turned-money manager.  According to the SEC, he told his elderly clients that he was buying them shares in a real estate investment fund and, instead, spent their money on his own lavish lifestyle.  Read more about this case at the SEC’s press release. 

A recent case from the Securities and Exchange Commission underscores how even initially well-intentioned brokers and investment managers can cause baby boomers and seniors severe losses.  The change, from well-intentioned broker to severe threat to a clients’ nest egg, flows from a single decision.    (more…)

The Securities and Exchange Commission (SEC) has charged Watermark Financial Services Group, Inc. (Watermark Financial), Watermark M-One Holdings, Inc. (Watermark Holdings), M-One Financial Services, LLC (M-One), Watermark Capital Group, LLC (Watermark Capital), Guy W. Gane, Jr., and Lorenzo Altadonna with running a Ponzi scheme that raised at least $5.7 million from approximately 90 investors, including a number of senior citizens, through the sale of debentures and promissory notes.  According to the SEC, the defendants - based in Western New York State - told investors that their money would be invested in real estate, but instead misappropriated the money, and used money from later investors to pay supposed distributions to earlier investors. 

A review of the SEC’s complaint shows that Altadonna was a stockbroker while allegedly selling these investments.  That fact should remind baby boomers and seniors that a well-recognized name on the door is no protection against broker misconduct. 

If your grandchild is in daycare, there are probably cameras monitoring every corner of the facility and an employee responsible for monitoring the video screens.  If your child had a choice between placing your grandchild in daycare with video monitoring and a daycare without video monitoring, which would you have them choose?  What if the daycare with video monitoring cost an extra ten dollars a week?  With that answer in mind, ask yourself whether you are taking similar precautions with the nest egg that it took you decades of hard work to accumulate.  (more…)

Imagine a bank transporting $10 million in cash from the vault at its main branch to one of the branches in the suburbs.  The branch manager comes to the newly hired teller and tells her to load the cash in the back of her VW and drive it out to the suburban branch.  (more…)

Studies show that people will pay much more money on repairs than they would pay to prevent the breakdowns that necessitate those repairs.  Psychologists attribute this phenomenon to an irrational optimism.  It is certainly each individual’s prerogative to make that decision for him or herself.  After all, he or she has to live with the financial consequences.  But stop and consider how that analysis applies to an irreplaceable asset like your nest egg.    (more…)

In my years at the Securities and Exchange Commission I came across cases that hugged the line between securities fraud (over which the SEC has jurisdiction) and consumer fraud (over which the Federal Trade Commission has jurisdiction).  The question turns on whether the fraud involves a security - a question not as easy to answer sometimes as you might think.  (more…)

The SEC has charged Jeanetta M. Standefor, age 40 of Altadena, California, and Pasadena, Calif.-based Accelerated Funding Group (AFG), with operating an $18 million real estate investment scheme targeting the African-American community.  Read the details in the SEC’s press release. 

One of the most common misunderstandings about the law of insider trading is that only company insiders or those who get a tip from them can be liable for insider trading.  The law is more complicated than that.  As it should, it reaches every scenario in which someone trades based on material inside information.   A recent case illustrates the point. (more…)

The SEC has made hedge fund fraud and insider trading cases enforcement priorities.  They have been able to kill two birds with one stone with a recent case alleging insider trading by a hedge fund manager.  Read the SEC’s press release.