How an RIA got in hot water in New Hampshire and why RedBlack is being touched by an ensuing bankruptcy

RIABiz,

What do we have here? One of RedBlack’s former investors in is allegedly in trouble with the law; it’s former co-founder is asked for comment and has nothing to add; it’s Vp of marketing provides nothing more than a response to the allegation and it’s CEO is silent. What are we to take away from this. Based on the article it looks like the train is still on the tracks. Where is RedBlack’s CEO statement? Would you mind clarifying the intent?

JP

Lisa / Brooke,

From the calls I’ve received the consensus is this is an unfortunate distraction for RedBlack and nothing more. There is no comparison between Tamarac’s Spangler and RedBlack’s Rowe. According to public documents filed by the FBI, Spanger is alleged to have taken client funds and invested them in his private holdings. No such allegation exists with RedBlack. Rather the public record shows that a former RedBlack investor is having issues with Finra which have driven him into possible bankruptcy. To infer RedBlack’s viability is in question is at best ridiculous.

As I stated at the opening my information tells me that advisors see no issue other than a brief legal distraction and nothing more. One in particular questioned the intent of this article.

Peter

Hey Peter, I think your comment is great. I actually really wish someone from RedBlack or yourself had made that comment to me on the record that we could have used in the story, “This is an unfortunate distraction for RedBlack and nothing more.”

But I’m glad you stated it in the comments section so everyone who reads the story will see that comment.

We spent a great deal of time on this one – looking at court documents and then asking more folo-up questions to make sure we were providing as accurate of a picture as possible. As you know in this case, the court documents do clearly reference RedBlack’s assets. But rather than just using the court documents on their own, we went back to RedBlack trying to get more perspectives – multiple times!

Luckily, the RedBlack attorney provided some insight and essential information.

I think this is a really interesting story on many levels. We read a lot about advisors who allegedly run these Ponzi schemes and here’s an advisor who is not charged with doing that, but mostly charged with unwisely investing money – which quite frankly can happen to many advisors.

Peter, I also do agree with you about the Tamarac case. Seems like these are two very different situations.

Tell that to the elderly widows who lost hundreds of thousands of dollars thanks to a co-founder of RedBlack.