Did you lose money investing with Raymond Lucia (Buckets of Money) (CRD# 1073284)?
Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing with Raymond Lucia (Buckets of Money). If you suffered losses investing with Raymond Lucia (Buckets of Money), then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim.
UPDATE 6/18/2020: The Securities and Exchange Commission (“SEC”) has finally reached a settlement with the high profile investment advisor and talk show host Raymond Lucia (Buckets of Money) after a long and contentious battle that included a landmark Supreme Court ruling on the proper appointment of administrative law judges. The SEC originally barred Raymond Lucia (Buckets of Money) and his firm from the industry and imposed fines totaling $300,000 for promoting questionable back-testing of his proprietary investment strategy. Under the terms of the settlement, and without admitting or denying wrongdoing, Lucia agreed to pay a $25,000 fine and drop his pending affirmative case against SEC. The SEC also backdated Raymond Lucia’s industry ban to September 2015 with the right to apply in three years, thus allowing him to reapply immediately if he so chooses.
The SEC’s original charges arise from Raymond Lucia’s promotion of his “Buckets of Money” strategy which involved allocating assets to different buckets of short-term, medium-term, and long-term investments. During presentations, the SEC claims that Raymond Lucia presented slides which purported to show the results of historical tests, which he called “backtests,” of how the strategy would have performed through various markets. The SEC argued that the “backtests” were presented as empirical, historical proof that his strategy provided inflation-adjusted income for life and growth of investment principal even under difficult market conditions. However, the regulators contended that the presentation was materially misleading and omitted information about the effect of certain assumptions about inflation, rates of return on real estate investment trusts, and fees; among other reasons.
In September 2015, an SEC administrative law judge barred Raymond Lucia from the industry, imposed $300,000 in fines, and stripped Raymond J. Lucia Companies of its investment adviser registration. Raymond Lucia attempted to appeal the decision, arguing that the administrative law judges used by the SEC must be lawfully appointed rather than hired, per the U.S. Constitution’s Appointments Clause. The SEC and a three-judge panel at the U.S. Court of Appeals for the D.C. Circuit rejected Raymond Lucia’s appeal, and a subsequent en banc hearing with 10 appellate judges resulted in a split decision.
In 2017, Lucia took his case to the Supreme Court and won by a vote of 7–2. In June 2018, the high court reversed the decision of the D.C. Circuit, holding that the SEC’s administrative law judges are considered inferior officers of the United States and therefore must be appointed by the President or other delegated officer. The court ruled that Raymond Lucia was entitled to a new hearing before a different administrative law judge or the SEC itself.
Earlier this year, LPL Financial announced plans to purchase Lucia Securities from Raymond Lucia’s son, who purchased the firm in 2010. The firm has approximately 20 advisors and $1.5 billion of client assets under management.
UPDATE: Lucia had previously petitioned the U.S. Court of Appeals to review and vacate the SEC’s decision to bar him. In his petition, Lucia challenged the right of the SEC to use administrative law judges to hear cases like his. The Court denied his appeal.
“In view of the [Securities and Exchange] Commission’s findings that [Mr. Lucia] repeatedly and recklessly engaged in egregious conduct without regard to his fiduciary duty to his clients, petitioners fail to show that the commission’s sanction was unwarranted as a matter of policy or without justification in fact, or that it failed to consider adequately his evidence of mitigation.” “According, we deny the petition for review.”
As of June 18, 2020, Raymond Lucia (Buckets of Money)’s FINRA BrokerCheck Report contains the following:
Not currently registered as broker.
25 Customer Dispute(s)
1 Regulatory Event(s)
1 Employment Separation After Allegations
Current and Previous Registrations
10/2006 – 06/2010 LUCIA FINANCIAL LLC (CRD# 37179) – SAN DIEGO, CA
11/2007 – 06/2010 FIRST ALLIED SECURITIES, INC. (CRD# 32444) – SAN DIEGO, CA
09/2002 – 11/2007 SECURITIES AMERICA, INC. (CRD# 10205) – SAN DIEGO, CA
01/2006 – 02/2006 HELIX TRADING LLC (CRD# 37179) – SAN DIEGO, CA
04/1996 – 09/2002 THE ADVISORS GROUP, INC. (CRD# 14035) – BETHESDA, MD
06/1994 – 05/1996 JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY (CRD# 5181) – BOSTON, MA
08/1991 – 05/1996 JOHN HANCOCK DISTRIBUTORS, INC. (CRD# 468) – BOSTON, MA
09/1992 – 07/1993 FIRST WALL STREET CORP. (CRD# 13024) – LA JOLLA, CA
01/1983 – 08/1991 PENN MUTUAL EQUITY SERVICES, INC. (CRD# 4031) – HORSHAM, PA
Due Diligence Requirement
FINRA requires broker’s to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokers and the brokerage firms they work for that fail to conduct adequate due diligence on investments they recommend or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
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