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SEC Accuses San Diego Advisor Ray Lucia of Misleading Investors

By George Miller of Shustak Reynolds & Partners, P.C. posted on Thursday, September 6, 2012.

In early September 2012, the SEC initiated formal cease and desist proceedings against San Diego-based financial advisor Raymond J. Lucia, Sr. and his company, Raymond J. Lucia Companies, Inc. According to the SEC, Lucia mislead investors by claiming his proprietary “Buckets of Money” trading strategy had been extensively “backtested” and would generate income for life.

Backtesting refers to the evaluation of an investment strategy, theory or model to determine how it would have performed in historical market conditions. The objective is to thoroughly test the strategy and gauge its effectiveness before offering it to investors. According to the SEC, despite Lucia’s representations, he and his company “performed scant, if any, backtesting” of the “Buckets of Money” trading strategy. The SEC also claims Lucia and his company made other misleading representations about the strategy and its associated fees.

Lucia has hosted a daily radio show–the Ray Lucia Show–since 1991, which has been broadcast nationally since 2000. According to the SEC, through his registered investment advisory business, Lucia manages approximately $300 million in client assets. According to his attorney, Lucia disputes the SEC’s allegations and will fight the complaint.

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