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eat your own cooking

Invest With Managers Who Eat Their Own Cooking

“It pays to invest with managers who invest in their funds. ” – Russel Kinnel of Morningstar I think this statement will come as no surprise to most investors. Mr. Kinnel did some research on mutual funds to prove the point. It turns out that manager investment is correlated to better performance. Mr. Kinnel was […]

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Money Market Fund Reform Makes My Head Hurt

One of the critical moments of the 2008 financial crisis was caused by Lehman Brothers and its effect on the Reserve Fund, a money market fund. The fund had a significant amount of short-term debt issued by Lehman. Enough that the fund had to ‘break the buck.’ Now even “cash” was not a safe place […]

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Picking Cherries

As an investment adviser, you can’t take the best investments for yourself and leave the lesser ones for your clients. That’s exactly what the Securities and Exchange Commission is accusing J.S. Oliver Capital and Ian O. Mausner of doing. The SEC’s Enforcement Division is alleging that J.S. Oliver and Mausner engaged in a cherry-picking scheme […]

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917 report

Financial Illiteracy Found in Study of Financial Literacy

“Understanding the needs of investors is critical to carrying out the Commission’s investor protection mission,” said SEC Chairman Mary L. Schapiro. Section 917 of Dodd-Frank required the SEC to study the existing level of financial literacy among retail investors. The study was recently released and paints an ugly picture. Here’s a key quote: These studies […]

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Charles-Schwab

Stay on Target

Don’t stray from your investment strategy. Don’t chase yields. Make sure your investment strategy follows your marketing materials. According to SEC charges, Charles Schwab failed to do this with its YieldPlus Fund in 2007. The fund was marketed as a Short Term Bond fund and described the Fund as a cash “alternative” that generated a […]

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FINRA Guidance on Private Placements

The Financial Industry Regulatory Authority released Regulatory Notice 10-22 reminding registered firms about their obligations regarding suitability, disclosures and other requirements for selling private placements to customers. A Broker-Dealer that recommends a security is under a duty to conduct a reasonable investigation concerning that security and the issuer’s representations about it. This is true regardless […]

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Should You Invest in Ethical Companies?

Yesterday, I was excited to see that the World’s Most Ethical Companies for 2010 had outperformed the S&P 500. Ethisphere went back five years and charted the performance. They found a 53% return for the 2010 class of companies, compared to a 4% return in the S&P. The hindsight of looking back on the performance […]

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Accidental Securities Underwriter

So you made almost $1 million on selling penny stocks through the pink sheets on $75,000. Nice pay day. Then the SEC makes you give it all back. This is the sad tale of Rodney Schoemann, a professional stock market trader. Schoemann had previous purchased some restricted shares in Stinger Systems, Inc. that were marked […]

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