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Fox Analyst Charles Payne Was Paid To Push Now Worthless Stocks

  • June 27, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Scams & Schemes

Yet another reason to avoid the talking heads in the financial media!

According to the investigative reporting of Eric Hananoki at Media Matters:

Charles Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the stocks of at least three companies since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.

According to a Media Matters review, Payne was paid $40,000 to promote The Brainy Brands Company, “$25,000 by a third party” to promote NXT Nutritionals Holdings, and an undisclosed amount for a “consulting arrangement” to promote Generex Biotechnology Corporate.

Payne’s sponsored stock pitches shared a common theme: using his cable news and Fox credentials to assure skeptical investors that his advice was trustworthy. A direct marketing company which worked with Payne stated it brandished Payne’s Fox News connections “to build credibility” with his potential customers. The stock pitches were also used as a vehicle to entice readers to join Payne’s subscription newsletter.

Payne and his company, Wall Street Strategies, have a problematic history related to the disclosure of paid stock endorsements. In 1999, the Securities and Exchange Commission (SEC) announced that while not “admitting or denying” wrongdoings, Payne “agreed to pay a civil penalty of $25,000.” 

Source: Media Matters


Not Googling a New Investment Advisor, Seriously?

  • June 20, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Scams & Schemes, Seeking Prudent Advice

It’s hard to believe, but there are people who sign on with a new financial advisor without bothering to do even the bare minimum due diligence.  Consider the sad story of fraudster Janamjot Singh Sodhi who ran a Ponzi scheme promising high rates of return in a relatively short period of time.

Sodhi solicited and received funds from investors starting in 2005 and through the fall of 2011 despite the fact that

  1. The New York Stock Exchange permanently debarred him in January 2006, and
  2. The California Department of Corporation ordered Sodhi to cease and desist from dispensing investment advice in California.

Potential investors and soon-to-be victims could have easily learned about these serious redflags had they bothered to simply google “Janamjot Singh Sodhi”.  Sodhi did not use an alias so the information and fraud was in plain sight.

“Forget about hiring an attorney or paying for a background check. If you just typed his name into Google you could find out that before he solicited you he was barred by the NYSE and threatened by the state of California. … People spend more time buying a used car for $2,000 than giving $10,000 or $1 million to someone they never met or checked out to invest.”  This from Bill Singer, a lawyer who specializes in investor fraud.

Sodhi will spend the next four years and nine months in jail and required to pay back the $2.4 million he stole from investors.

Source: CNBC


Beware of Deceptive Refinance Pitches from BofA and Other Lenders

  • June 13, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Seeking Prudent Advice

An article published by American Banker alerted us to a questionable refi pitch that Bank of America is currently making in direct mail advertising:

“See if refinancing could save you an estimated $4,344 in annual payment savings,” reads the pitch in boldface on a direct mail advertisement sent to a New Jersey borrower last month.

The ad compared the borrower’s current mortgage payment on a 20-year fixed-rate loan with an interest rate of 4% to B of A’s “new loan program” that offers a 30-year fixed-rate at 3.75%. B of A showed a breakdown in which the borrower would be paying two points on the new loan, adding an estimated $8,977 in fees and closing costs. That would increase the overall interest rate to 4.1%, excluding taxes and insurance.

In short, B of A’s pitch, with its focus exclusively on lowering the borrower’s monthly payment, implied that the deal was in the consumer’s best interest, even though the borrower would end up paying a higher interest rate and would be adding 10 more years to the overall life of the loan.

Such tactics are not in a borrower’s best interest and fly in the face of efforts by the Consumer Financial Protection Bureau to make consumer products more transparent, simpler and easier to understand, consumer advocates added.

Andrew Pizor, a staff attorney at the National Consumer Law Center, examined B of A’s letter and calculated that the new refinance offer would add $37,188 more in interest over the life of the loan compared to the borrower’s current mortgage.

“This ad clearly implies that this refinancing is right for this borrower,” says Pizor. “I think the pitch is kind of deceptive because it boldly mentions ‘save’ and ‘savings,’ repeatedly, and of course it refers only to the higher interest rate and overall loan amount in the footnotes. Marketers know those details will be overlooked.”

The list of frequently asked questions also gives borrowers the impression “that B of A is looking out for the borrower’s best interest,” Pizor says. “If I was representing this borrower, I’d argue that Bank of America has assumed a fiduciary duty to the borrower by making this promise. But I’m sure the bank wouldn’t agree.”

Bottom line: consumer advocates and banking industry officials appear to differ over whether ads such as B of A’s rise to the level of making false or misleading claims.

 

 


When Brokers Cross Sell Bank Products Beware

  • June 6, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Seeking Prudent Advice

Bank of America Chief Executive Brian Moynihan is looking to squeeze Merrill Lynch’s “Thundering Herd” for more revenue and profit through cross-selling.

In the banking business when you try to sell customers additional products it’s called “cross selling”.  Banks like BB&T and Wells Fargo have strong cross-selling reputations.  For example, Wells Fargo says it sells an average of 6 products to its retail-banking customers.

Things get messy when this cross selling breaches the boundary between bankers and brokers.  For example, Merrill Lynch brokers’ yearly bonus partially depends on how much money brokerage clients have in checking and savings accounts at parent Bank of America.

Merrill Lynch brokers and managers complain that this compensation structure essentially puts Bank of America’s own interests ahead of clients since Merrill employees have a disincentive to advise customers to withdraw money from bank accounts.  Other Merrill brokers say customer service at BofA isn’t reliable enough for them to feel good about encouraging clients to do business there.

Source: Merrill Staff Sees Red Over BofA Cross Selling (Wall Street Journal)


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