Tuesday, July 10, 2018

Two Special Places In Hell

Few of us maintain our mental sharpness until the end.  Mental fuzziness should be a final luxury at the end of life, not open season to be preyed upon.  Unfortunately, I just read about yet another Ponzi scheme, stealing $102 million from about 600 seniors in Florida, and I hope there is a special place in Hell for those who prey upon the vulnerable. 

However, there is something unusual about this case.  When a financial advisor retires, it is not uncommon for him/her to sell their "book of business" to another advisor.  That is how the crooks in this case acquired senior investors to fleece.  I think financial advisors should bear some responsibility for selling their "book" to an unsavory advisor.  The selling advisor should conduct reasonable due diligence that the buyer is not a crook.  That is the fiduciary thing to do!

The tricky part is which authority should have jurisdiction?  If the selling advisor is retired, neither the SEC nor FINRA have direct jurisdiction.  If local law enforcement has jurisdiction, with their minimal financial training, how can they determine "reasonableness" of due diligence?  The selling advisors should also have their own special place in Hell.