The back story: The <org>SEC says its investigators found that while pitching
Tandon struck a settlement deal, neither admitting nor denying charges, the
Tandon did not respond to phone calls and emails requesting comment.
RISKS OF INFLATION
According to the
Tandon also touted Simran's relationship with CalPERS to other prospective clients from 2008 to 2011, and instructed other Simran employees to do the same, the
Yet there are other reasons a firm might try to pump up its numbers. Some may be tempted to inflate their assets to register with the
"Another reason we're seeing inflated AUM more frequently is advisors trying to make themselves look better to get new clients, or to avoid showing clients that they're bleeding assets and have a domino effect of clients leaving them," Bernstein says. "They think 'if i could just hold onto assets for another quarter….’ And on the institutional side, some institutions won't even deal with an advisor unless they're a certain size."
But advisors should beware: The risks of inflating AUM include enforcement, fines, suspension and, perhaps even more damaging, reputational damage. Bernstein says: "These risks can be the scarlet letter for financial advisors."
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