Ken Fisher's Five Signs of Financial Fraud

Image via Wikipedia

Ken Fisher is pushing a book, and put in an appearance at the Commonwealth Club of California recently. His book is about Ponzi schemes generally, and the traits they typically share. Here's his list as best I can summarize it from listening to his appearance at the Commonwealth Club:

1. Combines custody with decision-making; this means that your shares are held in-house and not with an independent third party.
2. Numbers too good to be true/fees to low to pay manager/manager making money by "just trading."
3. Investment strategy opaque, not understandable by laymen, or a trade secret.
4. Markets things that don't matter but contribute prestige; has flashy hobbies; makes a big deal of associations with politicians or celebrities. Makes a big deal of impressive family history or impressive resume. Implies that he's offering you a special person or specially connected.
   
5. Does not answer questions; resistant to due diligence; shuts down/out people who ask questions.

Also, Fisher basically says that there's no difference between a politician and a crook, so beware anyone to takes politicians seriously.

Related articles by Zemanta

• Bernard Madoff Sentenced; Books To Come (mediabistro.com)
• Madoff lied - SEC missed it (money.cnn.com)
• Tonight at the Commonwealth Club (SF) (sciencecommons.org)
• Madoff Blinded Regulators With His Classiness [Fraudsters] (cityfile.com)