 The Wild Wild World of Wealth |  |
Nevin Shapiro billed himself as one of the largest grocery wholesalers in the U.S. Nevin Shapiro is now spending the next 20 years in a federal prison. What what wrong? For one, Shapiro raised almost $1 billion from investors but never sold groceries.
With nary a word in conventional media, the U.S. Attorney’s office in Manhattan issued a press release announcing the indictment of 11 people involved with online poker. Included in the indictments are the founders of the three largest online poker companies doing business with American gamblers. Should players be worried? The answer is yes if they failed to pay taxes on their winnings.
Even a little due diligence would have uncovered the fraud. Royal West was “paying” investors a higher rate of return than it was charging borrowers who were purchasing real estate from the company. In other words, it was a mathematical impossibility that the loans being made the company could generate the required rate of return needed to pay investors.
Like all good things (including commissions paid per trade), wrap fees can and do work well and they can and do work very poorly. As always it depends more on the skills, experience, and integrity of the advisor and the investment firm training, guiding and supervising him or her than it does on the method of compensation.
Part III in Dennis Sheehan’s fascinating series on the Chinese markets. Here’s a short excerpt:
The old adage what goes up must come down became a reality in 2008. The Shanghai Exchange, hit with world financial crisis dropped an amazing 65%. Volatility has always been a part of China. The recovery was quick and in 2010 the world’s largest IPO was offered at 22.1 Billion USD which was completed by the Agricultural Bank of China. By the end of 2010 the exchange had a market cap of 2.7 Trillion USD.
James Konaxis was quite the guy. In just a few years he was associated as a stockbroker (registered representative) with a half dozen different brokerage firms – Raymond James, Morgan Stanley & Sentinel Securities, to name a few. He also had quite a track record of severe regulatory violations. Nothing, however, like the most recent violation – taking money from the widow of a one of the people killed in the 9/11 terrorist attack on the Pentagon.
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