Woodbridge Wealth Files Chapter 11 Bankruptcy

[HealthGuy]

Scagent: Let me play Devil's advocate with you for a moment. Regardless of Woodbridge doing right or wrong...1. How and why does a private lending opportunity with a historical track record of paying a stated rate of interest returned on monies loaned have to be classified as a 'security'. Its not an investment, its a private loan. 2. And what makes a Registered Investment Advisor any better offering a 'security' (investment) whereby someone can lose their entire principal. How is that 'security' secure? So whats better or whats worse? Regardless or guilt or wrongdoing, Woodbridge had been offering a rate of return with return of principal for years (to my limited knowledge) for years on their bridge loan plan. Maybe the SEC made a problem with the constant state investigations where there was no problem at all. People were living off these interest payments until the SEC started stepping in. Did Madoff have 9,000 investors? Woodbridge had about 9,000 people involved in this loaned money program.

 

[DHK]

How and why does a private lending opportunity with a historical track record of paying a stated rate of interest returned on monies loaned

You keep talking about how long they've been in business and reliability of returns.

Let me help you: Bernard Madoff - Wikipedia

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008.

On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie".[14][15][16] The following day, FBI agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted multiple investigations into Madoff's business practices, but had not uncovered the massive fraud.[7]

Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the mid-1980s[17] and may have begun as far back as the 1970s.[18] Those charged with recovering the missing money believe the investment operation may never have been legitimate.[19]

Regardless or guilt or wrongdoing, Woodbridge had been offering a rate of return with return of principal for years (to my limited knowledge) for years on their bridge loan plan. Maybe the SEC made a problem with the constant state investigations where there was no problem at all. People were living off these interest payments until the SEC started stepping in. Did Madoff have 9,000 investors? Woodbridge had about 9,000 people involved in this loaned money program.

Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008

Regarding SEC Competency:
In 1999, financial analyst Harry Markopolos had informed the SEC that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. According to Markopolos, he knew within five minutes that Madoff's numbers did not add up, and it took him four hours of failed attempts to replicate them to conclude that Madoff was a fraud.[71] He was ignored by the SEC's Boston office in 2000 and 2001, as well as by Meaghan Cheung at the SEC's New York office in 2005 and 2007 when he presented further evidence. He has since co-authored a book with Gaytri Kachroo (the leader of his legal team) titled No One Would Listen. The book details the frustrating efforts he and his legal team made over a ten-year period to alert the government, the industry, and the press about Madoff's fraud.

 

[DHK]

Its not an investment, its a private loan.

One could call it a bond too. What's a bond? A loan.

 

[HealthGuy]

Thanks for the replies guys. But no one really answered my question #2.

 

[DHK]

2. And what makes a Registered Investment Advisor any better offering a 'security' (investment) whereby someone can lose their entire principal. How is that 'security' secure?

REALLY? You can't be bothered to look this one up yourself?

LMGTFY

Here's the link:
Security

Now, you made the classic misnomer of assuming that securities should be "secure" as in "principal protected". That's not the definition of a security.

And here's how MOST RIAs work with their clients.
Strategic vs. Tactical Asset Allocation

It's awfully hard to have a conversation with someone who doesn't even understand the basics and vocabulary of what we're talking about. You need to do your own homework. Investopedia is your friend. So is google.

I'm done.

 

[HealthGuy]

DHK, calm down. My questions are more rhetorically based with an intent to learn playing devils advocate with semantics. I dont need your schooling. Im RICP designated, and formerly securities licensed with a Series 6 and 63.

 

[DHK]

Rhetorical questions are not intended to be answered, yet you wanted an answer.

Rhetorical question - Wikipedia
A rhetorical question is a figure of speech in the form of a question that is asked to make a point rather than to elicit an answer.[1]

The mere FACT that you even asked the question ("how is that security 'secure'?) AND that it wasn't responded to before... to me shows that you should turn that designation back in to The American College and that you somehow got lucky on passing those securities exams.

 

[HealthGuy]

DHK you have a good sense of humor, funny stuff man.

 

[scagnt83]

1. How and why does a private lending opportunity with a historical track record of paying a stated rate of interest returned on monies loaned have to be classified as a 'security'. Its not an investment, its a private loan.

You claim you once had a series 6, yet you ask this question.

A Loan was not made to the Investors. The Loan was made to a separate business entity.

The Investors money funded the Loan... that is the exact definition of "Securitization".
A business interest being funded by many individual investors for a return of profits.

------

Now, it is possible to invest in a Privately held company and its not considered a Registered Security. But that company is limited to selling only 100 shares... and it is only stock that can be sold... where there are no guarantees or promises made.

And if that Privately held company decided to sell a product that gives the purchaser a financial gain (or the opportunity of one) on that purchase; that product is called an investment, and it must be regulated by the SEC or FINRA or FDIC or DOI.

 

[scagnt83]

2. And what makes a Registered Investment Advisor any better offering a 'security' (investment) whereby someone can lose their entire principal. How is that 'security' secure? So whats better or whats worse?

If you learned anything from your series 6 exam you should know how off base that statement and question are.

Not all Securities put principle at risk. There is a trillion dollar market called the Bond Market... which all provide a promise of guaranteed returns. Those returns are being promised by governments as well as private corporations.... many of those private corporations issuing Bonds are even in the business of real estate lending.

So, the technical term (not the made-up term) of what was being sold is a BOND.

And just like they said the "Note" holders would be, Bondholders are primary debtors if the company goes bankrupt.

They were selling unregistered Bonds. Its very clear cut.