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Legal Issues Blog

Athletes lose millions in bad investments and frauds

Whether at a horse race or in the stock market, there is no such thing as a sure thing. Investments are always risky; in some cases, that is what makes them so potentially lucrative. Everyone has a hot tip for someone who came into a large or unexpected amount of money, but those tips can cool entire careers.

Professional athletes are particularly susceptible to bad investments or outright fraud, as many on this path to wealth do not initially have the preparation to manage it. A financial strategy firm estimated that over the 13 years up to 2017, U.S. athletes in all sports were relieved of a total of $500 million by fraudsters.

Risk-free investments just don't exist

Every investment comes with some type of risk. There is a chance that you will lose your money. If you work with an investor who tells you otherwise, that's a red flag. They're not being honest with you, and you have to ask yourself if they really have your best interests in mind.

Some of the various risks that you may face, depending on the type of investing you do, include:

  • Opportunity risk
  • Inflation risk
  • Market risk
  • Operational risk
  • Liquidity risk
  • Credit risk

Bribery scandal leads to class-action lawsuit

A bribery scandal involving Mobile TeleSystems apparently cost them around $850 million dollars already, and now the company is facing a class-action lawsuit for not making proper statements regarding that scandal.

According to reports, the company and a subsidiary got caught up in a scheme in Uzbekistan that saw them pay out bribes of roughly $420 million. They then got caught, as the Securities and Exchange Commission (SEC) started looking into what happened there back in 2014.

Fiat Chrysler agrees to settlement in investor lawsuit

When auto manufacturers fail to comply with safety regulations, they put their customers and others on the road at risk. They can also do some financial harm to their investors.

In 2015, a group of investors filed a federal lawsuit against Fiat Chrysler Automobiles N.V. claiming that the company misled its shareholders about a number of safety issues, made false claims that it was in compliance with safety laws, minimized investigations into problems with its vehicles and delayed recalls. The investors claimed that when the company admitted its lack of compliance, the stock price dropped and they lost money.

In investing, what is churning?

If you pay your broker a commission on every trade, you're paying them for their knowledge and experience. You trust that they are making moves that will benefit you and your account.

Churning happens when the broker engages in excessive trading for the sole purpose of creating more commissions for themselves. They know that they get paid when they make trades, so they make trades that are unnecessary, that don't help you or that actually hinder you. They're just worried about what they can earn off of you and they hope you don't notice.

SEC ruling backed by Supreme Court

The Securities and Exchange Commission (SEC) leveled sanctions when an investment banker allegedly misled investors, making them think that a startup company was in a far better financial position than it really was. The case ended up before the U.S. Supreme Court, which backed the SEC by upholding those sanctions.

The crux of the case revolved around a pair of "deceptive emails." The banker, an employee of Charles Vista LLC at the time, said he did not write those emails. The argument was that he wasn't liable as a result. However, the Supreme Court justices said that he was involved with the scheme and was therefore liable, despite not typing those emails himself. The vote, according to reports, was 6-2.

CBS settles investor lawsuit over compensation to Redstone

In recent years, CBS Corp. has been dealing with a family drama that's not on its primetime line-up of shows. It involves 95-year-old Sumner Redstone, who once oversaw the network, along with the media company Viacom Inc. Both were under the banner of the company National Amusements.

As the elder Redstone's physical and cognitive health declined in recent years, his daughter Shari became a more visible force in the company. She famously clashed with CBS's former chief executive officer Les Moonves before he left the company last year amid multiple sexual misconduct allegations. Moonves could still receive a payout of $120 million, although it appears that he's going to have to fight for that.

Watch out for these red flags when picking a financial advisor

A financial advisor is supposed to help you invest your money wisely and set yourself up for the future. While they do make money for this service, your best interests are still supposed to be their top priority.

Unfortunately, you often get advisors that do not put you first. They think more about their own success or the firm's success. This can cost you significantly, and you absolutely need to know what red flags to look for.

How a securities fraud exposed a national college admissions scam

Sometimes, the most carefully organized criminal schemes can topple very suddenly. It only takes one "domino" in the line to set everything in motion.

That's basically how federal investigators stumbled into the biggest college admissions scandal to ever rock the nation. At least 50 people have been arrested -- including some well-known celebrities and executives -- and numerous students, colleges and universities are facing untold repercussions.

Questions to ask yourself before selling a business

Selling a business can be a complex and emotional process. After all, it’s likely you poured your time and energy into growing the company and helping it flourish.

If you are considering putting a business on the market, it’s important to be sure you’re ready. Ask yourself these questions before listing your company:

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