Why legal experts expect radio personality and registered rep Dawn Bennett to be barred from the industry for what started as an exaggeration of AUM
In the great tradition of legal quagmires, the cover-up seems as much the issue as the original broadcasted misdeed
Bill Winterberg
You wrote:
“But realize that AUM is a factor that the SEC says very much matters as a representation of who you are and how competent you are in managing assets.”
I disagree with you, Brooke.
Nowhere that I’m aware of does the SEC imply that “AUM is a factor … [of] how competent you are in managing assets.”
The SEC does say, “You should not use the term “registered investment adviser” unless you are registered, and you should not use this term to imply that as a registered adviser, you have a level of professional competence, education or special training.”
If advisers can’t use the term “registered investment adviser” to imply competence, I feel it’s fair to say the SEC also prohibits advisers from touting AUM to imply competence.
https://www.sec.gov/divisions/investment/advoverview.htm
Pete Giza
Which firm is more competent given $300MM AUM; a 5 person or a 20 person firm? Who is more competent; given two life-style RIAs, one with $50MM AUM or the one with $100MM AUM?
If AUM is a significant measure of competance then the public and the RIA industry as a whole is in trouble. It’s like judging a persons financial success by the car they drive.
Pete
Brooke Southall
Bill,
I think you are literally right.
But in my opinion the SEC is saying by its actions that the perception is the reality here. If you
inflate your AUM, people will presume you are more competent.
And I’m not sure the SEC would see things that way if there weren’t a grain or two of truth to it. With a few
Madoffian exceptions, you don’t get to $2 billion of AUM without doing some things right.
I think people should be willing to reveal their AUM. In the long run, Hiding it does more to perpetuate
false associations. The truth comes out, especially because it’s there in the ADV.
Brooke
Bill Winterberg
Whether it’s imaginary AUM, imaginary portfolio managers, imaginary clients, imaginary worldwide business offices, imaginary graduate degrees, etc., the SEC says, “The investing public is entitled to a level of confidence that information they receive about brokerage and advisory services is accurate.“
To me, the SEC’s position is very simple: don’t lie; for whatever reason; competence, prestige, expertise, it doesn’t matter. If you don’t have it, don’t flaunt it.
Ms. Bennett will soon find out what happens when you lie to investors.
Related Moves
Goldman Sachs-Creative Planning deal is bleeding defectors -- 16 more last week, report says -- auguring a 'potential disaster,' analysts warn
Dozens of former 'United Capital' advisors are fleeing at once, but Peter Mallouk is still battling to keep them, and Goldman Sachs may play legal hardball, sources say.
October 4, 2023 at 2:16 AM
Charles 'Chuck Schwab' called James Gorman to protest a two-broker poach, kicking off a hydra-headed legal battle, costing Morgan Stanley millions, so far
The Schwab founder and chairman invoked Charles Schwab Corp.'s zero-tolerance policy against Wall Street -- or RIA -- poaching of talent and AUM from Schwab branches.
March 9, 2023 at 1:23 AM
Why FINRA's late appearance into smoothie-throwing broker James Iannazzo's life might be rough
It's been about 11 months since Merrill Lynch fired him, and the CFP Board stripped him of the CFP mark; attracting the SRO's attention means more woes.
December 29, 2022 at 1:05 AM
Biz Briefs: SEC cracks down anew on RIA reverse churning ~ Envestnet borrows $350 million to buy its own stock ~ Fidelity is creating a crypto waiting list while exec questions crypto ecosystem
Fed up SEC is ready to take on all nonsense at once; stock shocks, Orwell's new name game; Fidelity hosts a line dance
November 18, 2022 at 2:56 AM
The Law Offices of Patrick J. Burns, Jr., P.C.
Specialized Breakaway Service
Top Executive: Patrick J. Burns, Jr., Esq.
Advanced Regulatory Compliance, LLC
Compliance Expert
Top Executive: Patrick J. Burns, Jr., J.D.