Friday, March 19, 2010

FINRA Press Release: Provident Asset Management

March 18, 2010 – Dallas-based Provident Asset Management Expelled for Marketing Fraudulent Private Placements Offered by Affiliate in Massive Ponzi Scheme

The Financial Industry Regulatory Authority (FINRA) issued a press release today announcing that 
“it has expelled Provident Asset Management, LLC, a Dallas-based broker-dealer, for marketing a series of fraudulent private placements offered by its affiliate, Provident Royalties, LLC, in a massive Ponzi scheme.”
A Ponzi scheme is a fraudulent scheme in which an investment fund, faced with insufficient earnings, uses the capital contributed by new investors to pay returns to existing investors. Such an investment fund necessarily requires a constant infusion of capital from new investors, typically focuses on attracting new investors with guarantees of unusually high returns and engages in the deception of all its investors regarding the fund’s earnings. Furthermore, the money from new investors is sometimes used by the fund’s managers for personal use.

The advice of the SEC in the link is worth heeding. Investors should watch out for Ponzi schemes by paying attention to the following regarding your investment fund(s) or manager(s): whether there are consistently high returns, whether the fund’s strategy is accessible by you and comprehensible to you, the ease with which you can receive payments, the ease with which you can receive and review the fund’s paperwork, whether the investments in the fund are registered with authorities such as the SEC or state regulators, and whether the investment professional is licensed.

SLCG supports information that helps protect the investing public from investment frauds such as Ponzi schemes.