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Tallahassee Trend
Two Legislators Crack Down on Ponzi Schemes
 Sen. Garrett Richter introduced companion “investor protection” legislation in the Senate. [Photo: Florida House of Representatives] |
Grady believes Ponzi schemes hurt faith in the financial system. “It’s just another reason not to trust anyone. It’s a reason to doubt your financial statements. It’s a reason to doubt everything. That doubt and uncertainty is what I believe is strangling America.”
Grady and Sen. Garrett Richter (R- Naples) have introduced “investor protection” legislation meant to help authorities crack down on securities fraud by broadening the state’s ability to investigate and pursue financial crimes and by strengthening registration requirements for investment advisers, dealers and others.
Currently, such crimes are pursued by the Office of Financial Regulation, which works with state attorneys. But Grady says the state attorneys are often “territorial” and not as experienced in handling such cases “because it’s not what they do.” His bill would allow the Attorney General to engage in civil investigations of securities fraud with the approval of the Office of Financial Regulation.
The bill, which has 20 co-sponsors, would also enhance the Office of Financial Regulation’s enforcement powers, allowing it to authorize emergency suspension of people and firms who fail to provide financial books and records to the state. Regulators could suspend or revoke the licenses of those who violate the rules and deny registration to those who have been convicted of certain crimes.
Alex Hager, interim commissioner of the Office of Financial Regulation, Florida Attorney General Bill McCollum, and Jack McRay, advocacy manager for the AARP’s Florida state office, have all expressed support for the legislation. Hager says the bill would provide his office with the “means to take swift action against these violators.”
Attorneys who work on Ponzi cases say they doubt the bill will do much to stop the schemes. “Ponzi schemes probably existed before Charles Ponzi, and they’ll continue to exist,” says Akerman Senterfitt attorney Michael Goldberg. “Until people are a little less greedy and do the due diligence and ask the questions that need to be asked, they’re going to exist. Even if you had thousands of regulators looking in all the right places ... it’s up to the investors to be more diligent.”
But Grady hopes that his “investor protection” bill will make people think twice before handing their money over to a potential con man. “People are, I think, particularly vulnerable because people have lost so much in their retirement plans and stock portfolios that they’re going to be too eager to make those (losses) up — and to wager to try to or want to believe that some con artist would want to help them. That’s why I think the timing of the bill is good — at least causes people to think about these things.”
