For more than a decade, Marcos Tamayo posed as an investment adviser, and he apparently had a lot of success playing the part. Remarkably, when Mr. Tamayo's business was shut down by the state of Nevada in 2017, he had 900 clients and $172 million in assets.
Problem was, his day job was working as a baggage handler for an airline, and he never registered as an adviser with any state or the Securities and Exchange Commission.
On the side, Mr. Tamayo, 46 and based in Las Vegas, happened to provide investment advisory services to his colleagues without the proper license or registration. Just to make it even more interesting, the name of his sham practice was Bored at Work,
according to an SEC cease-and-desist order from last week.
Mr. Tamayo, who did not respond an email request to comment, started giving investment advice in 2003, and by the SEC's account, he had an extraordinary run as a phony investment adviser.
He convinced his clients to give him online access to their airline retirement accounts, which he used to select investments and make trades for them for a $300 annual fee, according to the SEC.
And his business began to really take off at the end of 2015 after a Facebook posting in which he claimed falsely to have nearly $1 million in his own retirement account by showing a cropped image of a client's account statement. In fact, his account was worth only $160,000 when he left his job at the airline in 2017.
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Mr. Tamayo's business was lucrative. Between January and August 2017, he received more than $150,000 in advisory fees from clients.
His work was also very public. On his Facebook page, he answered questions about retirement investing and posted information about the retirement plan of the airline, which is not identified in the SEC's order.
Mr. Tamayo also posted pictures of a color chart to encourage employees to save. Orange stood for $1 million in retirement savings, according to the SEC. His "Bored at Work Project" Facebook group continued to grow; when he took it down last January, he had nearly 9,000 members, according to the SEC.
He had chutzpah. He tried to sneak one past the SEC in 2018, when he tried to register his new company, Bored at Work Retirement Services, as an investment adviser with the SEC, but failed to disclose to the SEC the 2017 Nevada disciplinary action.
Last week, the SEC announced its settlement with Mr. Tamayo, alleging he defrauded clients and failed to register his investment advisory business. He neither admitted to or denied the SEC's findings but agreed to pay disgorgement to clients of $155,000, as well as a fine of $50,000.
Unregistered investment advisers, often former brokers who have been kicked out of the financial advice industry or simply those without credentials,
have been popping up in the news frequently.
A big part of this problem is that investors choose advisers they know and trust without doing the appropriate vetting. Mr. Tamayo had more than 900 clients. How could that many people fail to check him out with the Financial Industry Regulatory Authority Inc. or the SEC?
Another issue is that such fake advisers often use financial institutions like banks, brokerage firms and, as in Mr. Tamayo's case, retirement plan administrators, to run their frauds and deceptions. Are these institutions doing enough to protect their clients?
"These issues go back to the fact that the country does nothing to educate people in terms of financial literacy," said Jenice Malecki, an industry attorney. "People are taught how to make money but not what to do with it, so the public doesn't know if it's appropriate to invest with someone who is not licensed or registered. That puts little pressure on banks and their attorneys to sniff them out."
"In the age of identity theft on the internet and sophisticated tracking systems, how couldn't a custodian figure out something was amiss?" Ms. Malecki asked. "This is one guy accessing 900 clients and that's not a huge red flag, and when you look him up and he's a baggage handler? That's unbelievable."
It's clear that fake financial advisers like Mr. Tamayo are a persistent problem for the financial advice industry, which continues to suffer damage to its reputation more than a decade after the financial crisis almost wiped out its standing with consumers.
What's not clear is what the industry and its array of regulators are doing to tackle the phonies.
