As you may be aware, two made for television movies are currently being released about the life of Bernie Madoff, who in 2009 was sentenced to 150 years in prison for securities fraud. While we obviously abhor the corrupt practices employed by Madoff, hopefully the additional media attention will increase awareness with investors on the importance of employing a thorough and meticulous approach when evaluating a financial advisor.
Fortunately, thorough evaluations of financial advisors are relatively easy to complete using information readily available on the Internet. If you know of anyone who is concerned, and interested in completing a complimentary evaluation of an advisor, a valuable pre-screen is available through the Paladin Registry here. Any financial advisor who is willing to submit to a review by Paladin will only be listed as a 5-Star advisor after they pass a rigorous evaluation. The SEC registered firm vets, rates and documents the quality of financial advisors.
Paladin, as part of their service offering, previously provided an evaluation of Bernie Madoff and through their research found numerous red flags that investors should be wary of when evaluating any financial advisor.
Red Flags relative to Bernard F. Madoff Investment Securities:
- Several complaints and censures were filed by regulatory agencies which are available for viewing at www.adviserinfo.sec.gov
- Madoff Securities acted as their own custodian for client assets, resulting in the potential for fraud since no independent custodian was involved to protect client assets
- The only stated method of compensation was commissions, resulting in huge potential for conflicts of interest and biased investment recommendations
- The hedge fund posted consistent returns during periods of significant market volatility, a sign of potentially fraudulent investment returns
- Friehling & Horowitz, a three person accounting firm, was the company’s auditor; a small firm, friendly to Madoff was paid off to overlook red flags about his business
It’s your money, protect it wisely!
To learn more about David Wilder and Total Wealth Planning, view his Paladin Registry profile.