According to reports, San Diego financial advisor, Ray Lucia, syndicated radio host and author of "Buckets of Money," has been ordered to pay a fine for allegedly conducting misleading seminars on his wealth management strategy for retirement.
Back in September 2012, the Securities and Exchange Commission (SEC) alleged that Ray Lucia's claims that his "Buckets of Money" investment strategy had been "backtested" over actual bear markets periods, was in fact erroneous. The initial complaint alleged that "scant, if any, actual backtesting" had been conducted.
After the SEC filed their initial complaint, Mr. Lucia spoke out in his defense. Reading from a lawyer approved statement on ABC San Diego 10 Lucia said, "We have a honest disagreement over retiree inflation rates, I have tons of documentation, it will all come out in the trial."
Despite Lucia's claims, "administrative-law judge Cameron Elliot ruled that Mr. Lucia misrepresented for years 'the validity of purported back-testing n seminars for prospective investor' interested in his Buckets of Money Strategy for retirement savings," according to the Investment News.
During the SEC's initial investigation, Lucia purportedly admitted that the only testing actually performed were some calculations Lucia made in the late 1990's and a two page spread sheet-copies of which no longer exist.
According the SEC's Investment Advisor Public Disclosure database, Lucia's firm Raymond J. Lucia Companies, Inc. is no longer a registered investment adviser firm.
Upon information and belief, Lucia's investment strategy for retirees also sometimes included investing in various non-traded Real Estate Investment Trusts (REITs), including Wells REIT and Hines REIT (among others). REITs are volatile, illiquid investments and are arguably unsuitable for conservative, retried investors who may need access to their money for unforeseen expenses. There is no well-established secondary market for non-traded REITs, making them hard to sell. In addition, REITs carry lofty front-end fees that can reach as high as 15%, and distributions often come from borrowed money and can include some of the investors' initial capital.
Financial advisors and brokerage-dealer have a fiduciary duty to their clients to ensure that each investment is appropriate given the client's age investment experience, net worth and financial objectives. The White Law Group continues to investigate the suitability of non-traded REITs recommended by Ray Lucia and his company.
For more information on The White Law Group's investigation in to Ray Lucia, visit http://www.whitesecuritieslaw.com/2012/12/13/ongoing-investigation-into-non-traded-reits-sold-by-ray-lucia/
To learn more about The White Law Group, LLC, please visit www.WhiteSecuritiesLaw.com.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.