NEW YORK, July 9 The Securities and Exchange Commission on Monday fined a radio personality and his financial advice firm $300,000 for spreading misleading information about his signature "Buckets of Money" investment strategy.
The SEC administrative law judge in the case also barred San Diego-based syndicated radio host Raymond J. Lucia Sr. from associating with other advisers, brokers and dealers, and revoked his eponymous firm's investment adviser registration.
Lucia, who hosts investing seminars and the nationally syndicated "Ray Lucia Show" on weekdays, has long promoted his retirement-focused financial strategy, which calls for retirees to spend money from "buckets" of safer assets like Treasury bonds before tapping riskier investments, to give those assets more time to grow.
The SEC judge, Cameron Elliot, said slideshows employed by Lucia failed to use actual historical data, like adviser fees and dividend rates for real estate investment trusts (REITs) he recommended, to show how fictional portfolios following his advice performed in past bear markets.
"He knew his fiduciary obligations as an investment adviser and he knew that he was violating them by misleading prospective clients for the purpose of selling REITs," the ruling said. "He ... became very financially successful as a result."
Lucia has denied the allegations, and his attorney said an appeal was likely.
"It's a very severe penalty, particularly in light of the fact that no investor was alleged to have lost any money at all," said Wrenn Chais, a Los Angeles-based lawyer with Locke Lord LLP. "It's had a devastating effect on his career."
If the decision stands it would effectively put Lucia out of the financial advisory business, the SEC judge wrote. Lucia's firm - Raymond J. Lucia Cos Inc - managed about $300 million of assets in 2010, according to the SEC.
Benette Zivley, a lawyer in Munsch Hardt Kopf & Harr PC in Austin, Texas, said it would be hard for an investor to determine whether Lucia's back tests were accurate without regulatory intervention.
"What they're trying to do is get the guy out of the industry before we do have articulated harm to investors," said Zivley, a former Texas securities commissioner.
(Reporting By Trevor Hunnicutt; Editing by Linda Stern and Steve Orlofsky)