Retired Janitor? Set An RIA Up!

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Jun 4, 2010 2:53 pm

Hi all, would love to hear what you think is the best remedy, if anything can be done at all, for the fact that RIAs are so easy to set up....from the new blog I put up: 

As of last week, Wesley Snipes, Annie Liebovitz and Uma Thurman can be added
to the long list of very wealthy people who have been duped by someone who is,
legally, considered a fiduciary. Manhattan-based financial advisor Kenneth Ira
Starr stole money from all three celebrities and many others for his own
personal use in yet another Ponzi scheme, according to SEC charges. His RIA
firm, Starr Investment Advisor, has been registered in New York and California
since 2006, according to its form ADV. He had $1.2 billion in assets in 35
accounts.

The Starr case serves as a reminder that, while the fiduciary standard is a
very valuable legal standard for financial advisors, it’s way too easy to
violate—and it’s way too easy to become a fiduciary in the first place. This
does not mean that applying the fiduciary standard to all financial advisors,
including registered reps., is a bad idea, just that it’s not enough, on its
own, to stop crooks. It’s especially pertinent today, as Washington hotly
debates financial regulatory reform, with Congress attempting to reconcile
distinct House and Senate bills before the July 4th recess. Extending the
fiduciary standard to stockbrokers who provide retail financial advice is on the
table, as is giving the SEC a lighter load of RIA oversight—raising the asset
threshold for SEC versus state regulation to $100 million from $25 million.

The full post is below:

http://blog.registeredrep.com/reformation/2010/06/04/retired-janitor-set-an-ria-up/

Jun 4, 2010 3:47 pm

Sorry to burst your bubble, but people that are going to steal, are going to steal.  It has nothing to do with ease of setting up an RIA.  We've seen more than enough brokers (RReps) from wirehouses, regionals, and indy B/D's swindle investors out of money just as easily, and it could be argued that a captive broker/dealer has more safeguards in place to control this than an RIA.  Like I said, if you want to steal, you'll find a way.  Unfortunately, this will always be the case in our industry.  As long as you have people that are naive/overtrusting, too busy to care or pay attention, or are in a fragile mental state (i.e. elderly people), there will always be some scheister wiating to pounce on them.

I really feel it has nothing to do with the structure of the RIA or brokerage.  Public education is the best medicine (i.e. "How NOT to get Swindled").

Jun 4, 2010 8:07 pm

Fitting middle name