Why the SEC charged me with fraud and the three lessons you can learn from my mistakes

The SEC charged me with fraud because they could, and they were justified in doing so

In 2005, I chose to use a hedge fund to manage a portion of my client’s portfolios because I believed they had a process to protect my clients’ principal while still allowing for upside growth. Today, I know that promises like that are almost always unrealistic and optimistic representations, unless they are guaranteed through an insurance company. But, back then, I didn’t have full clarity of the risks, and as a result, when Thompson Consulting Inc. (the hedge fund manager) collapsed, my clients and I lost $38,000,000. The SEC charged me with fraud because I did not disclose a material conflict of interest to my clients about how I was getting paid on the investment.

I’m here to tell the rest of the story that may get lost by only looking at the surface. It’s in the rest of the story that we learn the key lessons, including how this experience has turned me into one of the best advisors possible for my clients today.

The following three lessons are what you can and should learn before you choose your next financial advisor:

#1 Always find out how (and how much) your advisor is getting paid

The reason the SEC charged me with fraud was not because I lost $38M of my clients’ money with a bad allocation to a shady hedge fund company, but instead because I failed to...

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