Posted on May 12th, 2015
FINRA issued EDI Financial, Inc. (EDI), a Texas brokerage firm, a hefty $100,000 fine for pushing customers to purchase numerous private placements despite the danger of over concentrating their portfolios and putting investors at great risk.
Investing in private securities is risky business, especially when the firm selling you the investment is not taking the necessary steps to ensure that the private placements are suitable for a specific client, as EDI did. Private securities are investments offered to a small number of select investors rather than the public at large. They are not registered with the Securities and Exchange Commission (“SEC”) and are often the key source of capital for smaller businesses. Companies that issues private placement securities are not required to file financial reports, and their financial statements are not audited as closely as publicly traded companies. Consequently, investors are often unable to see how a company is performing, creating a dodgier investment environment.
Posted on Oct 4th, 2016
If you’re reading this article, there is a good chance you invested in or through an entity that is now in receivership, and you probably have a lot of questions! The purpose of this article is to give you a general overview of how receiverships work so you know what to expect. Every receivership is different, but every receivership goes through four overlapping stages: 1) stabilization; 2) investigation; 3) litigation; and 4) distribution.
These four stages all support the overarching goal of every receivership—the orderly winding down of a business in a manner that maximizes value for investors.
We will come back to these four stages in a minute, but first it is important to understand the background context that gives rise to a receivership.
Posted on Jun 23rd, 2015
Financial advisors love to sell variable annuities. The reason is simple—commissions of up to 8%. If a financial advisor can sell you a $200,000 variable annuity, that means commissions of up to $16,000. Not bad for a day’s work!
Unfortunately, commissions are just about the only thing that is simple about variable annuities.
The one reason why variable annuities are almost always a bad idea is that they are too complicated for ordinary investors (and normal people in general) to understand. Seriously, have you ever tried to read a variable annuity policy? Here is just one example from an actual policy. Try to stay awake through this, because there is a lot more you urgently need to know about variable annuities: