Most advisors know better than to oversell a product's performance, but what about its "approval" by the
According to charges filed by the
Between 2005 and 2011, the
The commission says GLR's marketing materials claimed the fund was "tied to well-known stock indices such as the S&P 500, Nasdaq and Dow Jones, as well as in oil, natural gas and technology-related companies." But since mid-2009, the regulator says, the fund did not invest in any publicly-traded securities. Instead, funds were placed in "illiquid investments" in two private startups and used to pay back other investors and fund the "entities Geringer controlled," the
Beyond that, the
'CAN'T CATCH EVERYBODY'
Needless to say, registration with the
"This stuff goes on. There are bad folks out there and they lie to people," he says. "You know, it's just like any other law enforcement…[the
Third-party examinations could help solve this problem, Cipperman argues. "This is exactly the kind of case that it could have helped with," he says. "A small advisor like this is not a targeted priority."
But even advisors who aren't using false statements or running fraudulent schemes should be careful about how they market their services — particularly when mentioning
Cipperman's advice? "At the end of the day, if you have to scrunch up your nose when you make statements, it's not a good statement to make," he says. "We all accept a certain level of puffery in marketing, but when you're a fiduciary, you can't do that…you need to back up your statements with facts."
Last year, both Luck and Geringer pleaded guilty to securities fraud, mail fraud and conspiracy to commit mail and wire fraud, according to
Both Geringer's case and that of another partner,
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