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SEC kicks Ray Lucia's "Buckets of Money" ploy

Business talk-radio personality banned from investment industry

San Diego radio host Ray Lucia Sr. has lost his appeal of the action by the Securities and Exchange Commission to ban him from the investment business. The appeal was heard August 6 by the full commission.

On September 3, the commission upheld the ban, finding that Lucia and his former company, Raymond J. Lucia Companies, "committed securities fraud by making material misrepresentations to prospective clients about their retirement wealth management strategy."

This week, the commission, by upholding the decision of an administrative law judge, banned Lucia from associating with an investment advisor, broker, or dealer; revoked his investment advisor registration; ordered him to cease and desist from further violations of securities laws; and ordered civil penalties of $250,000 against the firm and $50,000 against Lucia.

According to the securities agency, in touting his "Buckets of Money" strategy, Lucia told potential investors that the strategy had been backtested, indicating that it would have produced profits in prior periods of bad markets. But Lucia jiggled the numbers so that the backtests were misleading, said the agency.

"Actual backtests would have shown [the] model portfolio exhausting its assets before the end of the backtest periods rather than substantially increasing in value," said the agency on September 3 in its denial of his appeal. Lucia promoted the strategy at seminars and in two books.

As I reported last month, Lucia has sold his posh home near Rancho Santa Fe and is now living with his son.

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20

It is a long way from know-it-all financial guru to living with a son. Wall Street and his ilk can't wait to get their hands on Social Security. Look how well Joe Six Pack has done with his 401k's. The only retirement benefit that means anything is a defined benefit plan everything else is just smoke and mirrors.

Sept. 7, 2015

AlexClarke: Yes, George W. Bush at Wall Street's bidding tried to turn Social Security over to Wall Street. The attempt failed. It would fail even more thoroughly these days, because Main Street is more aware of Wall Street's predations now. Best, Don Bauder

Sept. 7, 2015

A guaranteed rate of return barely above inflation, or a healthy chance of earning far more. Hmmm...

BTW, free hint... there is no money in SS for anyone to "get their hands on". There is no huge pot of sweet, sweet money sitting there... only a pile of IOUs. And that's where you're staking your future... on a pile of IOUs. Thanks, but I'll take my 401(k), my IRA, my savings, and my other investments any day of the week.

Sept. 9, 2015

jnojr: Now, Social Security is surviving financially. It will run into trouble in a few years. Ditto Medicare. The demographics pose a problem. Population growth is slowing. The population is aging as people live much longer. Will there be enough people working to support those retiring? Best, Don Bauder

Sept. 9, 2015

A few mornings recently I've turned on local CBS Channel 8, to see a financial-advisory/investment sales pitch infomercial by Ray Lucia, Jr. How does Lucia, Sr. cease "associating with an investment advisor, broker, or dealer" if that includes his son, with whom he is living?

And who in the San Diego market would NOT have negative associations with the name, junior or senior?

Richard II:

"That owes two buckets, filling one another, The emptier ever dancing in the air,..."

Sept. 7, 2015

HonestGovernment: You make a good point. However, in banning Lucia Sr.'s association with people in the investment business, the SEC is talking about professional association. The Lucias could argue that their association is familial now. However, father and son's businesses have long been intertwined. Raymond Sr. also has a brother in the investment business.Best, Don Bauder

Sept. 7, 2015

Don, Your earlier report seemed to indicate that ol' Ray was in poor health. This ban may mean little, in that he's probably out to pasture anyway. We can wonder why he chose to misrepresent his system when he could have sold himself and his services without it. I'm going to guess that he did more good than harm over the years, in that he got people to save, invest, and think about their retirement years.

As to Alex, many among us are probably better off with some sort of defined-benefit retirement. Not everyone has the interest, temperament and economic/business acumen that it takes to manage a retirement nest egg. As for myself, I'd have more if I'd been able to keep all that FICA tax and invest it over the years. Some of that may be due to the fact that I earned an MBA over forty years ago, and used the skills and outlook to invest wisely. There was the fact that, despite my humble beginnings, I was in the third generation of the family to own financial assets and invested savings. Both of my offspring are on the way to managing their own finances in a way that will insure they have comfortable lives. And no, we're not rich people at all. (If you saw the modest homes we occupy, that would be obvious.) Not that we'd mind hitting it really big.

That's not to say that I resent my own Social Security direct deposit every month. It will keep coming no matter what happens to my other DB retirement payment and what I might do to squander the nest egg.

But would I do business with Lucia, Jr.? Not on a bet.

Sept. 7, 2015

Visduh: Yes, your investment savvy manifests itself in your posts. A defined benefit retirement program is great, but how many companies grant them to employees now? Most private sector plans are defined contribution. Government jobs are the main ones providing defined benefit plans to employees, and taxpayers have a right to be unhappy about that. Best, Don Bauder

Sept. 7, 2015

The ironically entitled "Employee Retirement Income Security Act" of 1974, intended to end abuses with retirement plans in the private sector failed miserably, in that it resulted in most of the private sector eliminating DB plans. Ahh, the law of unintended consequences was alive and well when ERISA passed and was signed into law. I'd love to see a "progressive" presidential candidate on the scene who was proposing that ERISA be, if not abolished, at least made less onerous, and a new approach be enacted. Yet while all that was going on in the private sector, the public employees were winning ever-more-generous DB plans. In my own situation, I do have a small DB benefit, and it's from the public sector. The irony of that isn't lost on me. Sigh.

Sept. 7, 2015

Visduh: But the government can't force private sector institutions, such as corporations, to go back to defined benefit plans. The government could make such a switchback more enticing for corporations through tax maneuvers, but couldn't force it legally -- at least I don't see how it could be done. Best, Don Bauder

Sept. 7, 2015

ADDED NOTE: I forgot to comment on one thing: yes, Ray Lucia Sr. suffered a heart attack recently. At the appeal hearing, his lawyer said it was a "serious medical setback." Best, Don Bauder

Sept. 7, 2015

Don: The difference between a minor heart attack and a serious heart attack is a minor heart attack is when you have one and a serious heart attack is when I have one.

Sept. 8, 2015

AlexClarke: Ray Lucia Sr.'s lawyer deemed the heart attack "serious" at the hearing at which he was trying to get the SEC's original ruling overturned. That may or may not mean anything. Even those who suffer mild heart attacks consider them serious -- understandably. Best, Don Bauder

Sept. 8, 2015

Just wondering if this means the Lucia Capital Group which touts "The Bucket Stategy" will continue its operation? Here's the link: http://www.luciacap.com

Sept. 8, 2015

Just Wondering: Lucia Capital Group is run by Lucia Jr., not Lucia Sr. The "Bucket Strategy" may or may not have similarities with his father's "Buckets of Money" strategy, but certainly it would not have a misleading claim about backtesting, as Lucia Sr.'s strategy did. Best, Don Bauder

Sept. 8, 2015

What are the ole saying...the acorn doesn't fall far from the tree... And, buyer beware. The Bucket Straegy or Buckets of Money, sounds too similar to me.

Sept. 8, 2015

JustWondering: Yes, the Bucket Strategy certainly appears to be a name that is meant to suggest Buckets of Money. Best, Don Bauder

Sept. 9, 2015

Ah-Ha-Rancho Santa Fe: Are you sure those ads aren't for Lucia Jr.'s operation? Best, Don Bauder

Sept. 9, 2015

He was our first financial adviser. Fortunately, not for long. We realized the mistake we made early on. He put us in an annuity in our IRA, which we got out of when we realized the mistake.

Sept. 9, 2015

Builtstronger: Ouch! Look out for the fees the salesman gets in peddling annuities. Normally, an annuity is tax-deferred, and so is an IRA. So, generally, it makes little sense to put an annuity in an IRA. Best, Don Bauder

Sept. 9, 2015

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Raymond Lucia Sr. - Image by Wikipedia
Raymond Lucia Sr.

San Diego radio host Ray Lucia Sr. has lost his appeal of the action by the Securities and Exchange Commission to ban him from the investment business. The appeal was heard August 6 by the full commission.

On September 3, the commission upheld the ban, finding that Lucia and his former company, Raymond J. Lucia Companies, "committed securities fraud by making material misrepresentations to prospective clients about their retirement wealth management strategy."

This week, the commission, by upholding the decision of an administrative law judge, banned Lucia from associating with an investment advisor, broker, or dealer; revoked his investment advisor registration; ordered him to cease and desist from further violations of securities laws; and ordered civil penalties of $250,000 against the firm and $50,000 against Lucia.

According to the securities agency, in touting his "Buckets of Money" strategy, Lucia told potential investors that the strategy had been backtested, indicating that it would have produced profits in prior periods of bad markets. But Lucia jiggled the numbers so that the backtests were misleading, said the agency.

"Actual backtests would have shown [the] model portfolio exhausting its assets before the end of the backtest periods rather than substantially increasing in value," said the agency on September 3 in its denial of his appeal. Lucia promoted the strategy at seminars and in two books.

As I reported last month, Lucia has sold his posh home near Rancho Santa Fe and is now living with his son.

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Comments
20

It is a long way from know-it-all financial guru to living with a son. Wall Street and his ilk can't wait to get their hands on Social Security. Look how well Joe Six Pack has done with his 401k's. The only retirement benefit that means anything is a defined benefit plan everything else is just smoke and mirrors.

Sept. 7, 2015

AlexClarke: Yes, George W. Bush at Wall Street's bidding tried to turn Social Security over to Wall Street. The attempt failed. It would fail even more thoroughly these days, because Main Street is more aware of Wall Street's predations now. Best, Don Bauder

Sept. 7, 2015

A guaranteed rate of return barely above inflation, or a healthy chance of earning far more. Hmmm...

BTW, free hint... there is no money in SS for anyone to "get their hands on". There is no huge pot of sweet, sweet money sitting there... only a pile of IOUs. And that's where you're staking your future... on a pile of IOUs. Thanks, but I'll take my 401(k), my IRA, my savings, and my other investments any day of the week.

Sept. 9, 2015

jnojr: Now, Social Security is surviving financially. It will run into trouble in a few years. Ditto Medicare. The demographics pose a problem. Population growth is slowing. The population is aging as people live much longer. Will there be enough people working to support those retiring? Best, Don Bauder

Sept. 9, 2015

A few mornings recently I've turned on local CBS Channel 8, to see a financial-advisory/investment sales pitch infomercial by Ray Lucia, Jr. How does Lucia, Sr. cease "associating with an investment advisor, broker, or dealer" if that includes his son, with whom he is living?

And who in the San Diego market would NOT have negative associations with the name, junior or senior?

Richard II:

"That owes two buckets, filling one another, The emptier ever dancing in the air,..."

Sept. 7, 2015

HonestGovernment: You make a good point. However, in banning Lucia Sr.'s association with people in the investment business, the SEC is talking about professional association. The Lucias could argue that their association is familial now. However, father and son's businesses have long been intertwined. Raymond Sr. also has a brother in the investment business.Best, Don Bauder

Sept. 7, 2015

Don, Your earlier report seemed to indicate that ol' Ray was in poor health. This ban may mean little, in that he's probably out to pasture anyway. We can wonder why he chose to misrepresent his system when he could have sold himself and his services without it. I'm going to guess that he did more good than harm over the years, in that he got people to save, invest, and think about their retirement years.

As to Alex, many among us are probably better off with some sort of defined-benefit retirement. Not everyone has the interest, temperament and economic/business acumen that it takes to manage a retirement nest egg. As for myself, I'd have more if I'd been able to keep all that FICA tax and invest it over the years. Some of that may be due to the fact that I earned an MBA over forty years ago, and used the skills and outlook to invest wisely. There was the fact that, despite my humble beginnings, I was in the third generation of the family to own financial assets and invested savings. Both of my offspring are on the way to managing their own finances in a way that will insure they have comfortable lives. And no, we're not rich people at all. (If you saw the modest homes we occupy, that would be obvious.) Not that we'd mind hitting it really big.

That's not to say that I resent my own Social Security direct deposit every month. It will keep coming no matter what happens to my other DB retirement payment and what I might do to squander the nest egg.

But would I do business with Lucia, Jr.? Not on a bet.

Sept. 7, 2015

Visduh: Yes, your investment savvy manifests itself in your posts. A defined benefit retirement program is great, but how many companies grant them to employees now? Most private sector plans are defined contribution. Government jobs are the main ones providing defined benefit plans to employees, and taxpayers have a right to be unhappy about that. Best, Don Bauder

Sept. 7, 2015

The ironically entitled "Employee Retirement Income Security Act" of 1974, intended to end abuses with retirement plans in the private sector failed miserably, in that it resulted in most of the private sector eliminating DB plans. Ahh, the law of unintended consequences was alive and well when ERISA passed and was signed into law. I'd love to see a "progressive" presidential candidate on the scene who was proposing that ERISA be, if not abolished, at least made less onerous, and a new approach be enacted. Yet while all that was going on in the private sector, the public employees were winning ever-more-generous DB plans. In my own situation, I do have a small DB benefit, and it's from the public sector. The irony of that isn't lost on me. Sigh.

Sept. 7, 2015

Visduh: But the government can't force private sector institutions, such as corporations, to go back to defined benefit plans. The government could make such a switchback more enticing for corporations through tax maneuvers, but couldn't force it legally -- at least I don't see how it could be done. Best, Don Bauder

Sept. 7, 2015

ADDED NOTE: I forgot to comment on one thing: yes, Ray Lucia Sr. suffered a heart attack recently. At the appeal hearing, his lawyer said it was a "serious medical setback." Best, Don Bauder

Sept. 7, 2015

Don: The difference between a minor heart attack and a serious heart attack is a minor heart attack is when you have one and a serious heart attack is when I have one.

Sept. 8, 2015

AlexClarke: Ray Lucia Sr.'s lawyer deemed the heart attack "serious" at the hearing at which he was trying to get the SEC's original ruling overturned. That may or may not mean anything. Even those who suffer mild heart attacks consider them serious -- understandably. Best, Don Bauder

Sept. 8, 2015

Just wondering if this means the Lucia Capital Group which touts "The Bucket Stategy" will continue its operation? Here's the link: http://www.luciacap.com

Sept. 8, 2015

Just Wondering: Lucia Capital Group is run by Lucia Jr., not Lucia Sr. The "Bucket Strategy" may or may not have similarities with his father's "Buckets of Money" strategy, but certainly it would not have a misleading claim about backtesting, as Lucia Sr.'s strategy did. Best, Don Bauder

Sept. 8, 2015

What are the ole saying...the acorn doesn't fall far from the tree... And, buyer beware. The Bucket Straegy or Buckets of Money, sounds too similar to me.

Sept. 8, 2015

JustWondering: Yes, the Bucket Strategy certainly appears to be a name that is meant to suggest Buckets of Money. Best, Don Bauder

Sept. 9, 2015

Ah-Ha-Rancho Santa Fe: Are you sure those ads aren't for Lucia Jr.'s operation? Best, Don Bauder

Sept. 9, 2015

He was our first financial adviser. Fortunately, not for long. We realized the mistake we made early on. He put us in an annuity in our IRA, which we got out of when we realized the mistake.

Sept. 9, 2015

Builtstronger: Ouch! Look out for the fees the salesman gets in peddling annuities. Normally, an annuity is tax-deferred, and so is an IRA. So, generally, it makes little sense to put an annuity in an IRA. Best, Don Bauder

Sept. 9, 2015

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