Tags: Social Media

Financial advice in Massachusetts is a high-tech business, with about 44% of state-registered advisors already using social media to reach clients and prospects.

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It also means the state is gearing up to regulate Twitter, LinkedIn, and Facebook use more effectively.

The Massachusetts Secretary of State, which also handles the state's securities regulation, found out earlier this month that while close to half of its RIAs are using social media, only 31% who do have written policies in place.

Furthermore, of the firms using social media, only 43% archive their Tweets and other messages for compliance purposes.

To improve these practices, the state regulator has formed a working group and plans to get new guidelines out by the end of the year.

Wondering how Massachusetts advisors communicate? Most (42%) use LinkedIn. Beyond that, 20% use their own site to post updates, 14% are on Facebook, 8% use Twitter, and another 8% blog somewhere else.

Tags: fraud

Federal prosecutors have formally indicted a 73-year-old religious talk radio host for allegedly bilking his listeners out of $194 million.

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Pat Kiley ran weekly radio show "Follow the Money" out of Minnesota, but the U.S. Attorney's Office argues that he advised his listeners to invest in a typical Ponzi scheme: guaranteed double-digit returns, completely liquid.

The scheme was marketed to Kiley's deeply religious audience between 2004 and 2009 as part of a vaguely apocalyptic scenario involving "financial armageddon."

He maintains his innocence and says he was only reading from scripts prepared by the rogue advisors at the center of the scheme -- who gave him access to a home recording studio to run his show, and who are now in jail.

Nonetheless, Kiley faces up to 20 years imprisonment himself if found guilty of wire and mail fraud, money laundering, and conspiracy.

His show seems to have been pulled from just about all of the 200 stations on which it ran.

Tags: Congress | Dodd-Frank | fiduciaries | sec

At least as far as the SEC is concerned, the concept of a uniform fiduciary code for RIAs and brokerage firms does not necessarily mean "separate but equal," but the prospect may be moot without more funding.

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Mary Schapiro's latest Congressional testimony clarified her position on the fiduciary issue, which has recently veered into discussion of separate but equally stringent rules for brokers and IA reps.

She acknowledges that under Dodd-Frank, brokers offering advice technically only need "no less stringent" regulation than RIAs already accept.

However, her emphasis on the idea that this regulation should be "uniform" and "harmonized" points more toward a truly unified fiduciary code for both compensation models.

As she points out: "The distinction between an investment advisor and a broker-dealer is often lost on investors and it remains difficult to justify why there should be different rules and standards of conduct for the two roles -- especially when the same or substantially similar services are being provided. Investment professionals’ first duty must be to their clients, and we look forward to implementing the study’s recommendations."

Elsewhere, Schapiro remains convinced that the SEC needs more money to achieve its Dodd-Frank mandate to monitor clearing firms, hedge funds, derivatives trading, and a wide array of additional entities and markets.

Even offloading RIA oversight to a self-regulatory organization would not fill the gap, she says, since an additional 750 advisors from hedge funds and private equity firms are coming into the SEC orbit at the same time.

In all, she still wants another 750 staff to cover all the bases, along with the money to build out the SEC's aging technological systems.

Tags: fraud | sec

A Houston advisor who was very active in local high school basketball programs has apparently killed himself after talking to SEC regulators about a complex Ponzi athletic recruiting scheme.

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David Salinas didn't seem to be registered with either the SEC or FINRA, and his professional Web presence is already getting hard to find. He seems to have primarily been an insurance agent.

The SEC won't even comment because they don't talk about ongoing investigations.

As a result, the advisory press really can't get a handle on his operation or why he'd want to kill himself rather than cooperate with the regulators.

But the Houston sports press knew Salinas pretty well and are putting a few of the pieces together. It turns out he started a very influential summer basketball program that developed several hot prospects.

Salinas then reportedly steered the prospects to college coaches across the Midwest who agreed to invest in his firm. 

Whether those investments were in any form of Ponzi scheme or not remains to be seen.