SEC Accuses Radio Personality Ray Lucia with Misleading Clients
Yesterday the Securities and Exchange Commission instituted administrative proceedings against nationally syndicated radio personality and author Raymond J. Lucia. Lucia is the owner of Raymond J. Lucia Companies, Inc., a former federally registered investment adviser doing business as RJL Wealth Management, and RJL Enterprises, Inc., an entertainment company through which Lucia produces the syndicated radio show, The Ray Lucia Show. The order charges Lucia with spreading misleading information about his “Buckets of Money” strategy at a series of investment seminars for potential clients.The charges primarily relate to the performance models that he claimed demonstrated his “Buckets of Money” strategy would provide inflation-adjusted income to retirees while protecting, and even increasing, their retirement savings. The seminars were aimed at attracting new advisory clients to increase the firm’s advisory fees, and in turn the firm’s bottom line. Lucia claimed the models had been subject to extensive backtesting. According to the SEC’s order, however, the “so-called backtests weren’t really backtests, and the strategy wasn’t proven as claimed.” Of note, Lucia’s “backtests” used a hypothetical three percent inflation rate, rather than the actual historical rates, making the strategy appear more favorable. The models also completely failed to account for the deduction of advisory fees and contained non-disclosures about any of these material factors, which directly affected the hypothetical returns of his models. The SEC also alleges that Lucia failed to maintain records for the backtesting as required by Rule 204-2(a)(16) under the Investment Advisors Act of 1940. The order states that the only documents for the calculations were “two two-page Excel spreadsheets, which fail to duplicate the advertised investment strategy.”For further information about the Lucia proceeding and related performance advertising considerations, please contact us at (619)298-2880.

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