A former financial advisor who cost a group of NFL players $43 million by steering them into a bum casino investment and other bad deals including real estate deals he took a peice of has been banned from the securities industry.
I wish I could say this was unusual, it’s not. We are seeing a growing pattern of financial advisors using their heavily regulated relationships with clients to lure them into unregulated, and unreported business deals that place the client at a high degree of risk and usually end up highly compensating the advisor whether the client wins or looses. Clients already trust and know these advisors as “my financial advisor” and that often replaces standards of due diligence because after all, it’s his or her job to look out for you, right? Not always.
Not only is this often prohibited by your advisor’s broker-dealer as “selling away” it’s supposed to be disclosed as an “outside business activity” or “OBA”. If you are dealing with a securities licensed advisor on both regulated securities and/or an unregulated private placement type deal and that has not been disclosed on his or her OBA statement – get worried, fast. He’s either sloppy or crooked and hiding the activity from FINRA and his broker dealer, or both.
The link below to FINRA’s BrockerCheck will help you do your own due diligence. When venturing into these areas you must do your homework. Do the basics, look for complaints, check local court websites to see any pending lawsuits from others, and look them up at the link below to help make sure they are clean, in good standing, and have disclosed that deal they are trying to put you in. – Ike Devji