Athletes ripped off by planner

[timo2]

How not to pick an FA
O.C. money manager bilked Mark Sanchez and Jake Peavy out of millions, SEC alleges - LA Times

Sent from my LG-H810 using Early Retirement Forum mobile app

 

[Sojourner]

Same as it ever was. Pro athletes making exorbitant sums of money get bilked by con men masquerading as "investment gurus". The only thing these crooks are really good at is knowing how to manipulate wealthy but very naive athletes, who it seems are even less informed than the general public when it comes to personal finance management.

Here is one interesting tidbit from the article that caught my eye.

Narayan [the crook] built relationships with Sanchez, Peavy and Oswalt [the pro athletes] by appealing to their shared Christian faith and interest in charitable work, according to the lawsuit. Sanchez and Narayan attended the same California church, the agency said.

Sigh. Once again, blind faith coupled with lack of common sense leads to trouble.

 

[Senator]

A fool and his money are soon parted...

 

[zinger1457]

Who can you trust? The NFL players association tried to solved this problem by creating a list of 'certified' financial advisors that would be safe for the players to use. Only problem is that some of the advisors on the list have also ripped off players, to the tune of over $100M.

 

[Sunset]

I'm not sure they are too much to blame.
They hired a Financial Advisor, they got statements showing how their investment was doing.

Don't we all do that in some way, I get financial statements from my brokerage, but there is no independent way to actually verify it's true.
It's not like I can phone GE and ask them "hey do you show in your books that I own 300 shares?".

 

[easysurfer]

I'm not sure they are too much to blame.
They hired a Financial Advisor, they got statements showing how their investment was doing.

Don't we all do that in some way, I get financial statements from my brokerage, but there is no independent way to actually verify it's true.
It's not like I can phone GE and ask them "hey do you show in your books that I own 300 shares?".

Getting statements is one thing. But according to the lawsuit, the wealth manager got hands on a lot more than requested:

From the article:

Oswalt and Sanchez had agreed to make six-figure investments in Ticket Reserve, but Narayan instead invested more than $7 million on behalf of each player, according to the lawsuit. Narayan invested $15 million on Peavy’s behalf, though the SEC said the pitcher did not authorize an investment in Ticket Reserve.

According to the suit, Peavy did not find out about Ticket Reserve until early this year when Oswalt called him with the news that Narayan had been fired from RGT for making inappropriate investments. The firm, which manages about $4.4 billion in client assets, terminated Narayan in February.

 

[YVRRocketSurgery]

I'm not sure they are too much to blame.
They hired a Financial Advisor, they got statements showing how their investment was doing.

Don't we all do that in some way, I get financial statements from my brokerage, but there is no independent way to actually verify it's true.
It's not like I can phone GE and ask them "hey do you show in your books that I own 300 shares?".

I kind of agree.

Obviously, you can't trust anyone but yourself (and sometimes you can't even trust yourself) but some people need to focus on what they are good at and get help on other things.
They invested their money with an FA who appears to have been a fiduciary.
They tried to limit their investment to 6 figures but the FA seems to have forged it to 7 figures.
You've got to admit, some financial documents you end up signing, read like greek sometimes when you try to review and understand it.

What are the lessons learned here?
If the ultra high net worth need help managing their money, only invest with major firms even with higher management fees so if your their goes rogue, you can sue the company?

 

[Sarah in SC]

That really sucks for them. Is hoped that the approved list that the player associations would help avoid these situations, but if even those guys are swindling the players...

I'd pretty much say right out that these guys shouldn't be investing in any sort of alternative investments. The standard should be net worth AND investing experience, not just net worth.

 

[Sunset]

Getting statements is one thing. But according to the lawsuit, the wealth manager got hands on a lot more than requested:

From the article:

Yes, but he showed them forged documents, so they thought everything was fine.
Just like I think I own 300 shares of GE

 

[easysurfer]

Yes, but he showed them forged documents, so they thought everything was fine.
Just like I think I own 300 shares of GE

Yeah. I see what you mean now about the forged documents.

 

[meierlde]

Yeah. I see what you mean now about the forged documents.

One way to check would be to look at the forms mailed out before shareholder meetings which contain the number of shares. I doubt a forger would go to the trouble of forging them, and if you go to the address to vote the shares and the number works it would show the proxy gathering company agreed with the statement.

 

[Badger]

You would think they would have at least a couple of grey cells rubbing together up there. It seems like large sums of money quickly acquired would have made them wary enough to research who to trust and where to invest especially when there is a looooong history of athletes getting ripped off this way.

If the NFL players association really wanted to help they could provide representatives from a few well respected mutual fund companies (ie Vanguard, Fidelity, TR Price) to offer "money coaching".

Cheers!

 

[mickeyd]

I wonder why no one guides these over-wealthy guys to Vanguard for their investments? Oh yeah, no one gets paid to do that and the investor needs to investigate it a bit on his own. Seems like an achievable task for someone who, at least, attended an American university for a while.

 

[Sojourner]

I wonder why no one guides these over-wealthy guys to Vanguard for their investments?

Exactly. You'd think the Player's Association (which is, after all, the strongest advocate for players getting the best possible deals from the NFL owners) would simply setup an arrangement with Vanguard and/or Fidelity to get each player a personal adviser that handles all their assets for a modest 0.3% per year, just like all non-celebrity-athlete clients can get.

 

[Sunset]

Exactly. You'd think the Player's Association (which is, after all, the strongest advocate for players getting the best possible deals from the NFL owners) would simply setup an arrangement with Vanguard and/or Fidelity to get each player a personal adviser that handles all their assets for a modest 0.3% per year, just like all non-celebrity-athlete clients can get.

Maybe the Player's Association decision makers get really nice presents from the FA's otherwise know as bribes/kickbacks