Fran Tarkenton

Equity indexed annuities – Fran Tarkenton loves them

January 31, 2019

Fran Tarkenton loves equity indexed annuities. That does not mean you should. Tarkenton is 79 years old and encouraging elders to purchase equity indexed annuities (also called fixed indexed annuities) as a way to protect themselves from elder financial abuse. That’s right. Fran Tarkenton is encouraging elders to purchase these high fee, non-liquid insurance products instead of investing in low fee, highly liquid investments like broadly diversified stock and bond index funds. Tarkenton has even written a book touting equity indexed annuities as the answer to protecting seniors from financial abuse by family members. Here it is: Tarkenton has good reason to love equity indexed annuities — he sells them. They are good for him because they generate substantial commissions and fees for him. If you read this article, you will learn that Tarkenton owns some of these annuity products, but also lots of stocks. While family members do engage in elder financial abuse, so do financial advisors and insurance salesmen. Selling unsuitable equity indexed annuities to elders often is elder financial abuse because of their high fees and lack of liquidity. These annuities often have surrender periods of over 10 years. What happens when the elder investor needs money for medical expenses or long term care? The investor is out of luck – that’s what happens. Why do agents sell them to unsuspecting elders? Because the agent can earn an upfront commission from the insurance company of as much as 10%. A commission that is not disclosed to the purchaser. Purchasers of equity indexed annuities are not protected by law the same way that purchasers of mutual funds, stocks, bonds, and even variable annuities are. That is because the powerful insurance industry convinced Congress that equity indexed annuities are insurance products — not securities — even when folks hawking them are obviously selling them as investments. If those annuities are not part of an overall investment plan, you might not be able to recover damages in FINRA arbitration. I address the problems of annuities for retirees in another post that you can find here: Getting back to Tarkenton, here is another reason he might prefer to sell annuities, rather than securities products. Twenty years ago, Tarkenton settled SEC charges of engaging in a fraudulent scheme to inflate his company’s earnings. In its complaint, the SEC charged the following: “Tarkenton, Addington, Gossett, Fontaine, Hammersla, Alvarez and Welch engaged in a fraudulent scheme to inflate KnowledgeWare’s financial results to meet sales and earnings projections. In all, KnowledgeWare reported at least $8 million in revenue from sham software sales. KnowledgeWare “parked” inventory with software resellers and other supposed customers that were given the right not to pay for the software, either orally or in “side letters” that were kept separate from the other sales documents. As a result of this scheme, KnowledgeWare falsely reported record sales revenue and dramatic increases in earnings in press releases and in quarterly reports filed with the Commission and disseminated to the public in 1993 and 1994 (“Quarterly Reports”).” “Even when KnowledgeWare later restated those quarterly results, KnowledgeWare continued to mislead the investing public by […]

Read more

Learn about crypto & blockchain at ABA Techshow

January 30, 2019

Join us at the ABA Techshow in Chicago – February 27 – March 2, 2019. The company will be warm and welcoming, whatever the weather. If you are confused about blockchain and cryptocurrency, our panel will help you make sense of it all. This is an area that all legal professionals need to understand. Here is a link to a primer on cryptocurrency and digital coins that I wrote for the ABA Law Practice Management Magazine: There is so much more at Techshow. Read about it here and then sign up.

Read more
woman wagging finger

Court tells SEC, this is not a security

January 25, 2019

The 5th Circuit Court of Appeals reversed a district court’s order granting the SEC summary judgment based upon a finding that certain oil and gas interests were securities. The 5th Circuit provides a detailed analysis of whether the partnership interests satisfy the Howey test. This is well covered in Thomas Gorman’s blog SEC Actions @secactions and should be of interest to folks in the cryptocurrency and blockchain space.

Read more
many choices at grocery store

More choice is not always better

January 14, 2019

According to traditional economics, having more choice is better than having less choice. But that is often not the case in the real world. Behavioral economics professor and Nobel Laureate Richard Thaler shows us that sometimes we are better off when we limit our choices.

Read more
storm clouds gathering

Preventing Elder Financial Abuse Program

December 26, 2018

As many of you know, preventing elder financial abuse is a topic that is near and dear to my heart. I am delighted to invite you to a program on January 21, 2019 in Chicago on what financial advisors, CPAs, tax preparation professionals, attorneys, and others who work with elders should know about how to protect clients from elder financial abuse. Not only is elder financial abuse devastating to the financial well-being of aging baby boomers, but research shows that it can lead to an early death. But how can we do this without alienating clients?  We will discuss relationship-enhancing  ways to make preventing elder financial abuse an integral part of your practice.

Read more
Truth without proof program description

Truth without Proof? Blockchain on Trial

November 30, 2018

You have irrefutable proof of a blockchain transfer of bitcoin. But how do you get that blockchain transaction into evidence?  It is not as easy as you think. The Chicago Bar Association Financial and Emerging Technologies Committee, FinTEx, ChicagoBlockchainProject, ChicagoBlockchain Center and the Loyola University School of Law present this live demonstration of how legal practitioners can navigate the rules of evidence with respect to blockchain ledger entries and crypto-assets.

Read more
old fashioned radio

Our past experiences affect our current investments

November 15, 2018

As human beings, we are influenced by all our past experiences. That means that our past experiences affect our current investments and other decisions. If your earliest investment experiences were during the 1970s — when interest rates were approaching 20% — you will forever think about investments differently than if your earliest investment experiences were during the bubble. This is why the research of behavioral economists like Nobelist Richard Thaler is so important for investors.

Read more
elderly couple walking

Determining client capacity – ABA 10 Commandments

November 5, 2018

The American Bar Association recently published some very helpful guidance for lawyers in considering client capacity to make legal and other decisions. The most important directive is that the correct question is NOT whether a client has capacity — it is whether a client has capacity TO DO A PARTICULAR THING.

Read more
magnifying glass and circuit board

Insurance coverage for SEC investigation of your ICO?

November 5, 2018

A question that businesses contemplating an initial coin offering (ICO) should consider is whether they have insurance coverage for an SEC or other government investigation. This is an excellent analysis of the question on the D&O Diary. Guest Post: ICO-Related Claims and Insurance Coverage: Questions You Should be Asking

Read more
Grim reaper

Collateralized debt obligations are back – that is scary!

October 26, 2018

Collateralized debt obligations rise from the dead A frightening Halloween development – the rise from the dead of collateralized debt obligations ( CDOs). These little darlings nearly brought down the entire financial system in 2008. But the fees that CDOs generate are just too attractive for financial firms to pass them up. And even if they blew up and contributed to the Great Recession, nobody went to jail.

Read more