We all have hobbies. Me?: Cycling, reading, kayaking. Some people have finance as a hobby. Sure you can spout off about finance. But, eventually you step into the world of financial regulation if your spouting off turns into financial advice.
Marcos Tamayo of Las Vegas was an airline baggage handler by day and, apparently, became an investment adviser by night. Tamayo learned about investing by taking classes at work and reading books during breaks at work. His fellow baggage handlers must have believed the financial advice he spewed forth on the tarmac and terminal. They gave him online access to their airline retirement accounts, which he used to select investments and make trades. He only charged a $300 annual fee.
Spot the issue? …. Correct, he was operating as an investment adviser and would have to register himself and his business.
He even had a name for the business: “Bored at Work”. But didn’t register.
Mr. Tamayo’s business took off in 2015 when he posted a doctored image purporting to be his account statement which showed a balance over $800,000. The fake image worked and sparked the interest of his fellow baggage handlers, seeking his investing acumen. By the end of 2016 he had over $110 million in client assets under management.
The Nevada Secretary of State got wind of his moonlighting as an investment adviser and brought a cease and desist order. The State wanted him to stop operations until he was properly licensed.
He may have actually tried to go legitimate at this point. He filed a Form ADV with the Securities and Exchange Commission. He even came up with a more conservative name for the business: BAW Retirement Services.
He made a fatal mistake in the filing. He checked the “no” box on Form ADV Items 11.D.(1)-(5) which ask whether there were prior investment-related actions, including by a state regulatory agency. That means he filed a registration that contained a material misrepresentation.
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