The Off-Wall Street Fund Managers- Read this before giving your money to them..

Fund managers are like plays. You basically have the ones that play on Broadway, then the ones that play a little bit off Broadway and then finally the ones that are a 100 miles from Broadway. Sometimes the ones off Broadway are good, but most of the time you walk out in disgust.

I write this post to you tonight to make you think before giving your money to the Off-WallStreet fund managers and so sit back for a bit. Read this twice as it may just save you some coin.

There are quite a few people out there that hold no licenses or registrations who somehow find a way to manage other people's money. They talk others out of their money somehow usually speaking about large returns. These guys remind me of the magicians at the Casinos who seem to saw people in half and make them disappear right in front of you. You and I know that its all illusion, but usually there are a few people out in the audience who believe it is real just as there are people out there who believe these guys when they say they can return 400% in a year.

I used to work with a guy that would give his money away to some woman who would then trade or invest the money away. He believed that she gave him a decent return. Then recently there was a woman I know who gave $250,000, her life savings, to a young man who seemed to know his stuff. He then lost every dollar of it somehow. She had to move out of her residence and into a shared-room type situation. She had to go back to work as a nurse which is an occupation that she didnt really care for.

Most recently, I came upon a few articles that I thought I would share here. Read through all three of the articles:

http://www.aolnews.com/nation/artic...-book-club-author-jacquelyn-mitchard/19533666

http://www.thevileplutocrat.com/bile/profile/trevor_cook/

http://www.startribune.com/business/90751939.html

http://www.parade.com/news/2009/12/6-the-richest-woman-in-town.html

This guy Trevor basically made some outlandish claims about how much he returned and had under management. He basically lied about everything. I dont think he lost all the money, but has it hidden away somewhere for when he gets out of prison...if he ever gets out.

Keep your eye on the first article. Why don't most people step up to say they lost money as a result of these guys?

"Mitchard said that at first, she was both angry and embarrassed that she had fallen victim to a ponzi scam. She and her husband were not foolish with their money, did not expect extraordinary returns on their investment, and live in a house her husband built himself. But that's when she realized it could happen to anyone. Mitchard wondered why no one had chronicled the ordeal before."

"I thought there would be a welter of these stories of people being wiped out. But there isn't," she said. "There's so much shame attached to it."

"Ponzi schemes have devastated thousands of investors across the country, but very few have written about the experience of being victimized by one of them. Late last year, Parade Magazine published Mitchard's first-hand account of what it felt like to lose everything in a scam."

The reason why people dont come forward is shame pure and simple.

I see these guys who want to manage money all over the place in different forms. I see them on blogs...I see them here on ET...I see them out there like that little kid sees dead people. There is no shortage of con-artists and confidence men that will pull a trick to get your money. These guys double-talk and always make it look like they are right. Whichever way the market goes well then thats the way they will say they traded in. They will say they have billions under management created from a hundred grand....it never ends.

Im not saying that all guys out there or on ET are ones that will do wrong with your cash. However, I believe a good many of them will probably do wrong and you wont ever see it again. The story above is just one of many out there. So now you have been warned about whats out there. You have learned from Madoff and now you have learned from Trevor Cook. Dont give your cash away...

 

This reminds me of my post on managed futures thread. Most of them available to normal folks are churn and burn chop shop. Brokers love them because most often the signals are black box, and you could never prove the broker churned you. Plus since they are involved the charge broker assist commissions.

 

Here is another article I found today. These guys are small potatoes when compared with Trevor Cook, but still a good example of the type of people out there. They look like you or me or anyone else and you can easily get caught up in their game. The winner will always be them while the loser will always be you.

Again, I like to think there are legitimate ones out there that will turn your dollar into two, but I tend to hear and find more horror stories then ones of good fortune.

I see there are 170 views on this thread and so that means a few people are smarter today then they were before. In the financial world, its always good to be paranoid because its guys like the one in this article that give you good reason to be...

:

http://www.timothysykes.com/2010/06...d-by-sec-assets-frozen-see-their-pics-photos/

SEC Charges Two Canadians With Fraudulently Touting Penny Stocks on a Website, Facebook and Twitter

FOR IMMEDIATE RELEASE
2010-114

Washington, D.C., June 29, 2010 — The Securities and Exchange Commission announced today that it has obtained an emergency asset freeze against a Canadian couple who fraudulently touted penny stocks through their website, Facebook and Twitter. The SEC also charged two companies the couple control and obtained an asset freeze against them.

According to the SEC’s complaint, the defendants profited by selling penny stocks at or around the same time that they were touting them on www.pennystockchaser.com. The website invites investors to sign up for daily stock alerts through email, text messages, Facebook and Twitter.

The SEC alleges that since at least April 2009, Carol McKeown and Daniel F. Ryan, a couple residing in Montreal, Canada, have touted U.S. microcap companies. According to the SEC’s complaint, McKeown and Ryan received millions of shares of touted companies through their two corporations, defendants Downshire Capital Inc., and Meadow Vista Financial Corp., as compensation for their touting. McKeown and Ryan sold the shares on the open market while PennyStockChaser simultaneously predicted massive price increases for the issuers, a practice known as “scalping.”

“As alleged in our complaint, McKeown and Ryan used all the modern methods to communicate with investors including the PennyStockChaser website, e-mail, text messages, Facebook, and Twitter yet failed to adequately communicate that their rosy predictions for touted stocks were accompanied by their sales of those very same stocks.” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, also alleges McKeown, Ryan and one of their corporations failed to disclose the full amount of the compensation they received for touting stocks on PennyStockChaser. The SEC alleges that McKeown, Ryan and their corporations have realized at least $2.4 million in sales proceeds from their scalping scheme.

The SEC’s complaint charges McKeown, Ryan, Downshire Capital Inc. and Meadow Vista Financial Corp. with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC’s complaint also charges McKeown, Ryan and Meadow Vista Financial Corp. with violating Section 17(b) of the Securities Act of 1933. In addition to the emergency relief already granted by the U.S. District Court the Commission also seeks a preliminary injunction and permanent injunction, along with disgorgement of ill-gotten gains plus prejudgment interest and the imposition of a financial penalty, penny stock bars against the individuals and the repatriation of assets to the United States.

In the course of its investigation, the SEC worked with the Quebec Autorité des marchés financiers (AMF), which was also investigating this matter. As a result of both ongoing investigations, the AMF obtained an emergency order freezing assets and a cease trade order against McKeown, Ryan, Downshire Capital Inc. and Meadow Vista Financial Corp. The SEC appreciates the collaboration with the AMF.

The SEC’s case was investigated by Michael L. Riedlinger, Timothy J. Galdencio and Eric R. Busto of the Miami Regional Office. The SEC’s litigation effort will be led by Christine Nestor, Amie R. Berlin and Robert K. Levenson. The SEC’s investigation is continuing.

 

This is why I don't aspire to manage other people's money as a fund-manager, unless that other-people's-money comes from a group that 1) can afford to lose money as part of a calculated risk, and 2) whose sole business is trading and risk-management. The idea that someone would not diversify to the point where their retirement is imperiled makes it that much worse. A nurse is not qualified to make this decision, and I doubt most of the public is.

I think my dad invested in some penny stock after being conned by a slick salesman, but he was smart enough to limit his losses to $6000 or so. When I learned of this as a kid, I felt so awful. Sometimes I'm not sure the risk is "real" to people, even for people seeking not-so-extraordinary returns.