Advisors Violating ‘RIA’ Rules
By: Tim Butt
As if it weren’t bad enough that broker-dealers, independent brokers, financial advisors, insurance agents, etc. are confiscating investor wealth on a continual basis due to lack oversight and the abuse of the ‘suitability standard’, now a new study by State Regulators of Registered Investment Advisors (RIA’s) finds an increasing trend of violations that should sound alarm bells to any investor investing with RIA firms.
The violations range from unethical business practices to inadequate supervision over trades to compliance issues. Most of the unethical business practices uncovered this year involved altered documentation, signed blank documents, and non-existent contracts. When it came to hedge fund advisors, they were in a league all by themselves as their violations included undisclosed conflicts of interests (what a surprise), cross-trading, and inaccurate valuations of security holdings. And they wonder why investors are losing trust with those working in the financial services industry.
According to the North American Securities Administrators Association, NASAA, state security regulators from 45 different states found during the first half of this year an average of 4.3 violations per advisor…not per RIA firm…per advisor! As long as these firms and advisors are driven by greed and can get away with these violations with no serious consequences, they’ll continue the practice of violating rules.
Here’s what’s making Tim Mad-as-Hell this week:
Due to the Dodd-Frank financial reform legislation, starting in 2012, state securities regulators will be forced to oversee a much larger number of RIA firms and their advisors, right at a time when state budgets, including those at every state’s Divisions of Securities, are being slashed due to deficits! This is a recipe for disaster and will expose investors to a much greater probability of scams, conflicts-of-interest, and overall abuse …all at the investor’s expense.
The only sure way to ensure with 100% certainty that your investments will never be compromised is to learn how to become your own most-trusted financial advisor…which is much easier than most think.