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Whether you are in retirement or are planning for retirement, you may consider working with a Registered Investment Adviser (RIA) to manage your retirement assets. RIAs offer professional financial advice and are bound by the fiduciary duty to act in your best interest. However, there are potential issues you should be aware of as you consider working with an RIA. Here is a list of 10 potential problems with entrusting your retirement assets to an RIA.

  1. Misalignment of Interests: While RIAs are held to a fiduciary standard by the Investment Advisers Act of 1940, this does not entirely eliminate the risk of self-interest affecting an RIA’s advice. For instance, RIAs might favor only those investment products from firms that are paying significant commissions to the RIA for selling that product. This means there is a significant potential conflict of interest causing an RIA to recommend the same small set of investment products to every potential client.
  2. Limited Product Offering: Many RIAs have a limited range of investment products due to affiliations with certain investment companies. This could mean you may not have access to the full spectrum of investment options that might be more suitable for your retirement needs.

El auge de las criptomonedas ha sido una de las noticias más importantes del mundo financiero en los últimos años. A medida que las criptomonedas como Bitcoin y Ethereum se han vuelto más populares, muchas personas se han preguntado si deberían invertir en ellas. En este blog, discutiremos los pros y los contras de las criptomonedas desde la perspectiva de un abogado especializado en reclamos de pérdidas de inversión.

Pros de las criptomonedas

  1.  Potencial de ganancias significativas: Uno de los mayores atractivos de las criptomonedas es su potencial de ganancias significativas. Desde su creación, Bitcoin ha experimentado un crecimiento fenomenal, con un aumento de más del 900% en solo un año. Aunque el crecimiento pasado no garantiza el crecimiento futuro, el potencial de ganancias sigue siendo atractivo para muchos inversores.
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Artificial Intelligence (AI), as it develops capabilities far beyond ‘program trading’ has the potential to greatly impact the world of investing in the stock market. In the past decade, technology has advanced greatly, leading to its use in a wide range of industries, including finance. While there is still some uncertainty about how AI will impact the stock market, it is generally believed that it will bring about significant changes in the near future.

One of the biggest benefits of AI in investing is the speed and accuracy of decision-making. With the ability to process large amounts of data quickly, AI algorithms can analyze market trends and identify profitable investments much faster than human traders. In addition, AI algorithms can be programmed to avoid psychological biases that can negatively impact human traders’ decision-making. This could result in more rational and profitable investment decisions.

Another potential benefit of AI in investing is the ability to identify patterns in data that humans might miss. AI algorithms can analyze vast amounts of data, including financial data, news articles, and social media, to gain a comprehensive understanding of a company and its potential for growth. This can provide investors with a more accurate picture of a company’s financial health and future prospects, allowing them to make better investment decisions.

One of the best ways an investor can protect the value of their investments is by equipping themselves with knowledge about common tactics scammers use to defraud investors. The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have identified five of the most common techniques used in committing investment fraud. [1]

More information on the first three of these tactics – the “phantom riches” tactic, the “social consensus” tactic, and the “credibility” tactic – and how investors can avoid them can be found in Part One of this two-part series.

Here, we will consider the remaining two most common investment fraud tactics identified by FINRA and the SEC: the “reciprocity” tactic and the “scarcity” tactic.

When it comes to protecting investments, one of the most useful strategies is awareness. Investors can empower themselves by knowing the basics of the most commonly used investment fraud tactics.

Per the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), three of the most common investment fraud tactics employed by scammers in the United States are known as the “phantom riches” tactic, the “source credibility” tactic, and the “social consensus” tactic. [1]

Each tactic essentially functions by allowing the fraudster to build a false narrative surrounding their supposed investment opportunity, thereby garnering interest and ultimately investment dollars from unsuspecting investor victims.

As the familiar adage goes, the higher the risk, the higher the reward. Of course, when it comes to investment strategies, risk is often one characteristic around which you can make informed decisions to mitigate or embrace, depending on your level of risk tolerance.

Yet there is one investment risk – the risk of fraud – which at first glance seems uniquely difficult to mitigate. Fortunately, there are indeed several steps investors can take to protect their hard earned investment dollars from fraud.

In the United States, the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) each offer investor resources for reducing the risk of investment fraud.

In a stark reminder to thoroughly confirm your stockbroker’s background, the Securities and Exchange Commission (“SEC”) recently charged a California man with defrauding investors of millions of dollars by using a patently false persona. [1]

The SEC’s complaint charged Justin Costello with violations of the anti-fraud provisions of several federal securities laws as a result of his role in this massive fraudulent scheme. [2]

While the SEC’s complaint alleges a broad web of fraudulent investment schemes, Costello mainly operated through deceit about his background, his qualifications, and the value of the companies he owned and operated. [2] Throughout the span of his fraudulent schemes, Costello was never registered with the SEC as a broker-dealer nor investment adviser. [2]

Even a well-trusted investment advisor can take advantage of their client relationships, as illustrated by a recent lawsuit brought by the United States Securities and Exchange Commission (“SEC”).

Per the SEC’s September 29, 2022 complaint, Bradley Goodbred, a registered investment adviser based in Illinois, misappropriated a total of $1,295,000 from a 97-year-old client between 2012 and 2021. [1] While the defendant, Goodbred, returned a portion of this money, his client still lost more than half a million dollars as a result of his fraudulent actions. [2]

According to the SEC’s complaint, Goodbred became the client’s investment adviser sometime before 2006, when the client and her husband were searching for a trusted, long-term financial adviser to help guide financial decisions in the event that the client’s husband passed away. [1]

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While it may be difficult to verify first-hand how secure your stockbroker keeps your personal information, a recent order from the Securities and Exchange Commission (SEC) shows that even the largest stockbrokers are prone to customer data breaches.

On September 20, 2022, the SEC fined financial services giant Morgan Stanley Smith Barney (“MSSB”) $35 million for failing to adequately protect its customer’s records and personal identifying information (“PII”). [1] The fine was entered via a settlement between the SEC and MSSB, through which MSSB has agreed to pay a civil penalty for the SEC’s charges without admitting to nor denying the violations. [2]

MSSB is a subsidiary of Morgan Stanley and focuses on wealth management services for clients ranging from individuals to large corporations. [3] More specifically, MSSB is the broker-dealer designation for the group more commonly known as Morgan Stanley Wealth Management.  [3] During the second quarter of 2022, Morgan Stanley Wealth Management recorded $5.7 billion in net revenues. [4]

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