Retirees wiped out, lose millions: SEC (invested with KNI Investments)

[question everything]

(Cross posting from Seniors group https://www.democraticunderground.com/11836880

When it comes to handling our money in retirement, there’s probably one number to keep in mind above all others.

That number? Zero.

For example, it’s the exact percentage of our savings we should be gambling on private companies, meaning those not traded on the stock market. And it’s the amount in round dollars that we should invest with charming, persuasive strangers peddling exotic investment schemes. And it’s also the number of those strangers to whom we should give actual custody of our funds. Oh, yes. It’s also the number of “low-risk investments” that will pay retirees (or anyone else, for that matter) 10% a year, or let alone per month.

Which brings us to the case of investment adviser KNI in Houston, Texas, where the Securities and Exchange Commission reports that as many as 70 investors, most of them apparently retirees and near-retirees, have just lost millions of their hard-earned life savings. In many cases, says the SEC, the retirees have lost everything.

A Texas widow lost her entire $30,000 retirement account. A Nevada individual lost his entire $92,000 retirement portfolio. A Kansas veteran and military professor, who was months away from retirement, lost almost all of his $320,000 retirement savings. An Alabama retiree lost $105,000, while the SEC mentions others who lost between $30,000 and $150,000 their retirement accounts. A retiree in Houston who had been seriously injured at work, and feared she could never work again, was seeking safety and income from her investments as a result. Instead, says the SEC, she lost her entire $75,000 retirement portfolio.

Total losses are about $3.7 million.

(snip)

Regardless of the legal ins and outs, the details of KNI’s investments as laid out by the SEC should raise a forest of red flags for any retiree, near-retiree, or their family. According to the SEC, KNI clients were sold securities in at least five private companies involved in things like importing gold and diamonds, consulting, “graphic tools” and travel software. KNI told clients its investment strategy “allows historic gains of +10% p.a. annual without the risk normally associated with them.” One of the companies was allegedly based in the Seychelles, the island chain off the east coast of Africa well known as a honeymoon destination, and was supposed to be selling gold to a refinery in Lebanon. Another company allegedly held patents for peptides—short strings of amino acids—that might cure cancer, among other applications. This company supposedly had a ton of cash held in a bank in London. Investments in these companies were wiped out.

Yes, sure, they were “financially unsophisticated,” according to the SEC.

But it remains infuriating that we apparently don’t teach everyone basic financial self-defense when they are still in school (along with all the other skills they will need to be an effective adult, and which we also don’t teach). If we did, and the SEC’s descriptions are accurate, these retirees would still have their money. So would millions of others, too. We live in a capitalist society. Not teaching people how to handle money is as crazy as not teaching them how to drive.

More..

https://www.marketwatch.com/story/retirees-wiped-out-lose-millions-sec-11621608491

[marble falls]

1. We're odd folks, we old. Never thought it would be possible to be so old and yet feel so good ...

When you approach 70 the object is to keep and protect the value. It's a nest egg, not an endowment to future generations.

People who've worked hard and scrimped and saved, who would never ever go to Vegas just to gamble, gamble on weather, war, stocks and bonds and with their personal wealth.

I gamble with my bookie, and I invest with a broker. Sometimes it's the same thing. The older you are, the more risk adverse you should become.



Though I just might take a plunge into cruise lines. I think they trimmed out the old boats and with decreased capacity they will be able to raise rates. And everything I hear says the demand will be crazy. Is that a risk or a gamble?

[MichMan]

2. Greed can always make things rational that sound too good to be true.

People should know better than to listen to someone promising high returns with little risk.

[gibraltar72]

3. Greed my friend,

Greed gets em every time. I once had a bank VP ask me to come to his office he told me he had just inherited $150,000 and wished to invest. I came back a week or so later and showed him a mutual fund that had a track record of 12%. I didn't hear anything from him for about 6 weeks. I got a call asking if I knew anything about Baldwin United. I worked for a very large financial institution and we got a heads up when SEC was making a move on a company. I said I heard they were insolvent. Pause then ask you didn't put your money with them did you? He defiantly said they showed me 16 percent. He's looking at a letter that tells him not to give them any more money. He's effectively lost $150,000 and he's justifying putting his money in a piano company turned investment company. A VP of a bank should know better. But greed did him in.

[question everything]

4. Amazing! He really should not have any executive position with any financial

institution.

[gibraltar72]

5. You'd be amazed what people would do.

Saw it time and again. Educated wealthy people. Not a clue on the basics.