By Alisa Radut, Fall 2017 Investor Advocacy Clinic Intern
Mutual Funds are investment companies that combine money from different investors, and, based on specific goals, invest in stocks, bonds, money-market instruments, and other securities. Shares can only be purchased from the fund itself or its broker (for example, they cannot be purchased from other investors). Investors who wish to sell their mutual fund shares redeem them by selling them back to the fund, or the broker for the fund, and they receive the current net asset value per share. Mutual funds are regulated by and registered with the SEC, and are managed by investment advisers, who are also registered with the SEC. As with all investments, it is important to do your homework before deciding whether or what type of mutual fund is best for your financial goals. The answers to some frequently asked questions regarding the different class types of mutual fund shares can be found on the FINRA website. Keep in mind that the risks and fees associated with each mutual fund varies, depending on what type of fund it is. FINRA also provides a useful list of five things you should know before investing in a mutual fund, including how much it is going to cost, and what the fund’s goals are. To help further increase your investing knowledge, listen to FINRA’s podcast on Mutual Funds.
By Julio Perez, IAC Guest Blogger
A major complaint most lawyers hear at some point is that they use too much legalese when talking to clients! The world of investments and stocks contains lingo similar to “legalese” (Investalese? Stockalese?) and rookie investors might be putting their money in the hands of “experts” who bombard them with such technical terms without fully understanding where their money goes. The real problem comes when these experts dazzle and awe their clients with this language only to scam them out of their money, with the rookie investor left none the wiser. I, as a neophyte law student who knows nothing of investing and until recently believed the “stock market” was some sort of open-air yard sale, am in the same vulnerable position as any other person trying to get into the stock market and invest into their future.
The purpose of this blog series is to take readers, both experienced and inexperienced, on an educational journey as I take the most cryptic and befuddling investing phrases and break them down into terms simple enough for me to understand (What does it mean to diversify a portfolio, and what does “using derivatives as an effective hedge against their underlying assets” mean?) Each post will begin with the most incomprehensible investing phrase I can think of, and end with the simplest plain-English “translation” I can manage. Each blog post will also contain links to official sources describing the investment terms in greater detail. This blog is by no means intended to be a guide on how to invest and enter the stock market, but hopefully by the end I can help at least some people avoid popular investment traps and better navigate the puzzling world of investments.
By Qudsia Shafiq, Fall 2017 IAC Student Intern
What can happen when a financial adviser meets deep-pocketed athletes who refuse to invest in his movie venture proposals? For one financial adviser, this meant ignoring the pros that told him no.
On May 6, 2016, the U.S. Securities and Exchange Commission (SEC) filed a complaint against Louis Martin Blazer III for allegedly repeatedly taking money from his clients under the guise of raising money for two film projects: “Mafia the Movie” and “Sibling.” The SEC charged Blazer, a Pennsylvania-based financial adviser with defrauding pro athletes and lying to SEC Examiners. The high-end, concierge firm allegedly took nearly $2.35 million from five different clients without their consent, all to invest in the two movie projects. Continue reading
On October 12, 2017, IAC Student Attorney Qudsia Shafiq delivered the following remarks to the SEC’s Investor Advisory Committee:
Good afternoon. My name is Qudsia Shafiq and I am a third-year law student at the Georgia State University College of Law, where I am a student intern in the Investor Advocacy Clinic. Thank you for giving me this opportunity to speak today. I would like to talk to you about our clients, “the little guy.” I will spend my time describing who our clients are, why they come to us, and why our clinic is so important for both clients, like them, and students, like me.
First, I would like to describe our clients. Every semester, we receive dozens of phone calls – calls from investors across the country. They are regular, middle-class Americans: hairdressers and homemakers, mechanics and skilled tradesmen, paralegals and schoolteachers – who are successful in their own professions but unsophisticated in financial matters. Despite their different backgrounds, they all share one misfortune: they entrusted a financial adviser who ultimately failed them. They thought they were being responsible. They worked hard to routinely save or received a small inheritance, thinking they were contributing to a comfortable retirement. They have lost up to $100,000 of their hard-earned money and have no other access to legal help. Most of our clients are near or past the age of retirement. Just like you and me, they hoped to spend this time with their families and friends, grandkids and great-grandkids – not with us and financial advisers in an arbitration proceeding. Our clients trusted their financial adviser, and now they are trusting us. Continue reading
By: Lynn M. Mckeel, Fall 2017 IAC Student Intern
Perhaps you already have started saving for retirement with a Traditional IRA, Roth IRA, 401(k) Plan, or Pension Plan. There may come a time when you decide to close out your existing retirement account and transfer your assets to a different account. This may occur for a number of reasons, including but not limited to, a change in employment, retirement, or spousal inheritance. Sometimes individuals have multiple retirement accounts and may find it easy to manage a single, consolidated account. When this transfer from one account to another IRA occurs, this is known as a Roll Over. Continue reading
By Eric Peters, Fall 2017 IAC Student Intern
Effective September 5, 2017, the SEC has amended Rule 15c6-1 of the Exchange Act to shorten the standard settlement cycle for broker-dealer transactions by one day. These broker-dealer transactions are called “settlements,” defined as the official transfer of securities to the buyer’s account in exchange for cash to the seller’s account when a security is bought or sold. The time period between the transaction date (when the sale took place) and the settlement date (when the sale was effectuated) is called the “settlement cycle.” Continue reading
By Qudsia Shafiq, Fall 2017 IAC Student Intern
Are you smarter than the ads you see? While you may think you can outsmart any ad, have you considered the possibility that you may not know an ad when you see one?
Think about where you turn to for investment advice: Is it from individuals (such as your financial adviser, friends, and relatives), traditional news sources (like television shows, radio stations, newspapers or magazines), or is it from the internet on your personal computer, tablet or smartphone? For most individuals, it’s usually a combination of these sources. But one thing these categories have in common is that they are platforms for product placement and advertisements. Continue reading