by KYW's Salil Gutt
A respected financial advisor may have perpetrated the
largest fraud in history. Investors could be out $50 billion with this massive Ponzi scheme. A resourceful advisor can conceal fraud to a point. However, there are two red flags that all investors need to be aware of.
First. If investment performance is too good to be true, it probably is. No one, but no one, can give a steady 8 to 12%, year after year as this advisor purportedly did. He did this by robbing Peter to pay Paul. If there is a secret formula that is not being disclosed it is only a question of time when you are parted with your money.
And. There should be a clear way of verifying who has custody of the assets. Custody means where the specific investments are being held. Do not automatically trust the monthly statements you receive. Periodically go directly to the firm where your investments are being held and ask for a duplicate statement. Technology now allows a fraudulent statement to be made with ease.
Moral. It pays to be more hands on with your investments and not trust the advisor blindly.
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