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Why RIAs need to pay heed to a ruling that put a media star and advisor out of business -- and out $300,000

A judge ruled that Ray Lucia lacked the back-up to justify his hypothetical back-tests as the SEC pins a bull's eye on the strategy

Author Lisa Shidler July 19, 2013 at 4:00 AM
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Ray Lucia: I'm pretty depressed that the government has such disdain for successful people and will stop at nothing to destroy them.

RIA Compliance



July 19, 2013 — 5:01 PM

Ray Lucia deserves little sympathy from the RIA community. It seems to be blindingly clear that an advisor who considers presenting a hypothetical backtest to the public ought to have bullet-proof documentation. He didn’t. Not even close. Now, as Todd Cipperman says in the article, “My view is the SEC has essentially outlawed it (backtesting).”

Thanks a lot, Mr. Lucia.



July 19, 2013 — 7:17 PM

Ben Stein? Say no more.

Brian Hamburger

Brian Hamburger

July 23, 2013 — 1:06 AM

Don’t shed a tear for Lucia. He was found to have generated over $12 million in commissions by selling REITs under the cover of investment advice using sales materials that illustrated returns that we’re disconnected with reality.
A cursory review of this case leaves a single lesson for most advisers: When engaging in risky business practices, be sure to follow the volumes of regulatory compliance guidance available. In the 47 page opinion, the administrative law judge found that Lucia seemed to have little to no basis for his “back-tests” and couldn’t actually show how he even came up with his methodology. The SEC is understandably leery about hypothetical, back-tested performance. It allows people to sell a dream, without any basis that the performance would have been anywhere near the actual performance.
No sympathy here.



July 24, 2013 — 6:39 PM

I have heard some very shaky promises on the Adam Bold Show. I am wondering why Lucia was targeted, and Bold wasn’t. ?

Roy Patterson

Roy Patterson

August 23, 2013 — 1:52 AM

“bold text”. I used to live in San Diego for many years. I know friends that used Ray Lucia’s Buckets of Money” investment plan. As far as I know, none of them lost money or were unhappy with the plan.

rocco milady

rocco milady

October 8, 2013 — 3:25 AM

It should be illegal for investment firms to use images of a smiling gray haired couple in white cotton shirts walking hand in hand along the beach at sunset, that’s what really bothers me!

Edward Bernhart

Edward Bernhart

August 6, 2014 — 8:37 PM

I would expect no sympathy from the RIA community only envy. In the climate of class warfare we now find ourselves it seems only fashionable to take down the perceived “fat-cats” and bring them to their knees. As a investor in his REITs and a subscriber to his bucket strategy and a former client of his firm I have never felt deceived, or swindled, by any of his promotions and feel that he has offered a real service to many who were previously at the mercy of the big banking firms and their representatives.

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