Legal Issues Blog

A smart investor is an educated investor. While you trust your financial advisors to a point, you still always have to be on the lookout for problems.

When do you know it's time to fire your financial advisor and hire a new one? Here are some of the biggest "red flags" you should know how to spot:

1. You're concerned about self-dealing. If your financial advisor doesn't always seem to have your best interests in mind and you believe that they're benefiting on the side from your transactions, you obviously don't -- or cannot -- trust that person. Move on.
2. They're very pushy about investments or financial products. You are ultimately in charge of your investments, and a good financial advisor will respect a client's limits. If you're being steered hard toward certain investments, you need to be suspicious of ulterior motives.
3. They're unclear about how they are paid. Remember that "fee-only" advisors (those who make a flat fee on their services or earn a salary) aren't making more per the product like those on commission or bonuses do. That doesn't necessarily make other fee structures wrong, but you should be concerned if your financial advisor isn't candid about it.
4. They cannot clearly explain the products they are steering you toward or the investments they want you to make. They may not even have a clear explanation as to why you should invest. Never trust a financial advisor whose best explanation is, "Trust me."

In a lot of ways, a business partnership is similar to a marriage. You incur some financial and legal vulnerability for the actions and decisions of your partner. You need to ensure you are both in agreement on major issues to prevent disputes down the road. Far too many people go into the early stages of a business partnership with rose-colored glasses on, leading to problems later.

A business agreement made with a future partner who will share executive responsibility or provide funding for a business concept can help ensure that you are both on the same page and that you have systems in place to navigate conflict later in your relationship.

The U.S. Securities and Exchange Commission (SEC) announced on Feb. 19 that they have ordered a cryptocurrency company Enigma MPC to return initial coin offering (ICO) funds to its investors. The federal agency is also ordering the blockchain startup to pay fines. The SEC argues that the company violated federal securities laws when it offered its Erthereum token known as ENG up as an ICO.

Enigma MPC first put ENG up for ICO in November 2017. That initiative resulted in the company raising $45 million. The value of the tokens quickly increased then plummeted within a matter of a few short weeks. The cryptocurrency is now ranked #120 among bitcoin. The company is valued at $38 million.

The so-called "Crypto Mom", who earned her nickname because of her ardent support of cryptocurrencies, has a new plan to let firms move these digital assets. It appears to be a long shot, but it will be worth keeping an eye on it.

The woman has been called the "U.S. Securities and Exchange Commission's loudest crypto advocate" and her plan is to get around tough rules for cryptocurrency. She put a new proposal up on Thursday, Feb. 6, which asks for securities rules to be held off for the next three years, during which time coins can still be traded. Both brokers and exchanges, under this proposal, would be exempt from many of the strict regulations that apply to other types of trade with different securities and with stocks.