Scam Alert for Wealth Managers

Users of financial services are obvious targets for scammers. So are the providers of those services. “It’s almost as if many of the fraudsters have worked in financial services in the past,” says a Finra official.

Wealth managers, keep your guard up!

Fleecing Retirees by Phone

Read the comments from bedeviled retirees and weep.

Beware the Crypto Jungle

Investment advisers win new clients by raising their hopes of becoming rich. Yet advisers perform their most valuable service when they save a client from becoming poor.

That service was never needed more than now, the age of cryptocurrencies.

Observers who couldn't believe their eyes when Bitcoin's value soared last year turned out to be right. Research suggests that only half the price rise was real – the rest was market manipulation.

Bitcoin mania spawned a swarm of entrepreneurs offering ideas, plausible or not, for cashing in on promise of blockchain. Steve Bannon, former White House adviser and Breitbart leader, reportedly has toyed with the idea of a new cryptocurrency called the "deplorable coin."

Four out of five initial coin offerings have been scams, according to one study. Why are people so eager to believe – and invest in – unlikely ventures? As The New York Times technology columnist observes concerning Bitcoin mania, it involves the willing suspension of disbelief:

[E]ven though the possibility of [Bitcoin] manipulation was mentioned often last year, it took months to put together detailed evidence that it had happened. 

And in that time, the whole world — the financial press, ordinary investors, anyone looking for the next windfall — put more money into Bitcoin. Even though lots of people should have known better — even though we all know the internet is lousy with scams — Bitcoin, we were told, was different. 

Nope, it wasn’t. Scams are everywhere online. Never let your guard down.

Wealth Management Clients Should Be Careful with Their Checks

Frank Abagnale Jr. ("Catch Me If You Can") in a WSJ interview:

Think about this: You go into a convenience store today and write a check for $9. You have to hand the clerk the check with your name and address, phone number, your bank’s name and address, your account number at your bank, the routing number into your account. That’s your wiring instructions. Your signature that’s on the signature card at your bank. And then the clerk has written down your state driver’s license number on the front and your date of birth. You don’t get the check back. You can get an image of the check; the physical check goes to [the store’s] warehouse, where eventually, six months from now, they will destroy it. 

In the meantime, anyone who would see the face of that check—from the clerk who took it at the counter to the one that made the night deposit—could draft on your bank account tomorrow, would have all the drafting instructions. Or they could go online [and order checks] that look exactly like your checks, but put their name on it and put your account number on it. So every check they write gets debited against your account. It’s so simple to do. 

It’s amazing to me that people are writing $9 checks from their wealth-management account, their private banking account, and giving them to some stranger in a store.

Scammed by a Scot

How venture capitalist William Icon, who probably doesn't exist, fleeced international investors.