Many years ago, I invested in a REIT that some talking head professional advisor recommended. I read their financials, read about the company and their holdings, and it seemed like a good investment. Turns out they were just a bunch of buddies and family members, using their buddy's celebrity status and a big platform, they were essentially pumping their trust fund, while giving their spouses options and their spouses started dumping like crazy. Of course all the common shareholders were left holding empty bags, and all of the properties they supposedly owned… I don't know where they went, but the fund collapsed, they all got very rich, and I check on them ever so often, and now their children have grown up and are running pretty much the same scam.
I learned from that experience, due diligence is far more than just looking at financials and SEC filings. You need to look into the lives of the individuals running such fund management companies, and all of their connections, and their tax filings, and everything you can find, and who all they are affiliated with, create a graph of their relationships, and avoid any who have ties to fraudsters who have cleverly robbed common share holders and retiree funds.
Anyhow, I fell for a similar scam on another publicly listed company years later. Slightly different scam. All of their filings looked good, their books looked good, they even had patents and products, and great sales. Turns out they were also a second generation of a scam. Their parents and buddies had numerous companies, and their companies would buy the products of their publicly listed company. And somehow, they were even able to tell when common shareholders bought shares on the open market. I found them discussing the matter and a celebration when I'd bought a bunch of shares, noting exactly how many I bought, and it was good enough to trigger them to start dumping. So, I and a bunch of other bag holders just watched the share valuation drop like a rock. The company is still “doing business”, but their sales are zero now, and no one goes to their office. They're just a shell and all living it up on their big win.
Fast foreward to today, and I'm looking at a company that claims to own a LOT of assets, and they claim to have billions of dollars worth of these assets. Yet, in their SEC filings, they note “not audited”. So, as far as I can tell, no one has ever laid eyes on their assets, but their financials look great and the SEC is like “go for it, list your fund”, and a bunch of retirement fund managers poured money into it. Graphing all of those people and their relationships, and all of the connections and layers, is a chore… and enlightening. I think… it's looking like a major heist, but still working on it, as are others.
But what the fuck ever. The bottom line is this. Time and time again, I've made mistakes as a little investor, learning as I go, but I've seen big fund management companies pour “blind” retiree funds into various companies, and millions of people lose a little here and there to what are essentially shells and scams. If the SEC is enabling this, if they're not auditing companies, if it's been happening for generations now… I've just come to the conclusion… WHAT THE FUCK DOES THE SEC DO? As far as I can tell they make up rules that constrain retail investors, but enable some amazing fraudulent and opaque activities by big money, old money, buddies.
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