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Buy more art to avoid taxes (Bloomberg)
Stefan Edlis was looking at a tax bill of more than $US20 million when he sold his Andy Warhol “Turquoise Marilyn” painting to hedge fund manger Steve Cohen, but ended up paying nothing. How did he do it? Half of Edlis’ earnings were deemed part of his private foundation, meaning they were tax-exempt, and the other $US40 million was parlayed into more artwork through a 1031 exchange, or like-kind exchange. According to Bloomberg, such an exchange “allows investors to defer capital gains by buying similar property of equal or greater value,” but “sellers must show that the art was purchased as an investment instead of for pleasure.”
SEC looking into the possibility Bank of America broke customer-protection rules (Wall Street Journal)
The Securities and Exchange Commission is investigating whether or not Bank of America’s Merrill Lynch unit put retail-brokerage funds in jeopardy at the expense of trying to generate more profits. The Wall Street Journal reports, “For at least three years, the bank used large, complex trades and loans to save tens of millions of dollars a year in funding costs and to free up billions of dollars in cash and securities for trading that Bank of America otherwise would have needed to keep off-limits.” The trades reportedly saved Bank of America close to $US20 million per year due to the lower funding costs.
T. Rowe Price keeps its headquarters closed, Legg Mason offices are open (Pensions & Investments)
T. Rowe Price Group announced its headquarters on 100 E. Pratt Street in Baltimore will remain closed on Tuesday due to the riots that erupted following the funeral of Freddie Grey, the man who died while in police custody. Employees were told to work from home, or travel to other offices. Meanwhile, Legg Mason kept its Baltimore-based headquarters open, but encouraged employees to work from home. No announcement has been made regarding Wednesday.
Ameriprise is buying JHS Capital Advisors (Financial Planning)
Ameriprise announced it is buying JHS Capital Advisors, an advisory firm with a checkered past. JHS brings $US4.1 billion in assets to Ameriprise, and a track record of losing money. The company booked losses from 2010 through 2013, and has not yet provided financials for 2014. JHS was fined in 2011 and 2013 for shady transactions.
An Ohio adviser is banking on other advisers retiring (Investment News)
In January, Joseph Heider left Dawson Wealth Management to start his own firm, Cirrus Wealth Management. Cirrus now has 300 clients and $US300 million in assets under management, and is in talks to acquire another $US750 million in AUM. What is Heider’s secret? “We’re looking for the adviser who still has a passion for the business,” Heider said, “but … would like to slow down.”
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