FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
‘Whiz kid’ accused of stealing more than $US700,000 from investors (Wall Street Journal)
Mark Malik, a 33-year old ‘fund manager,’ has been accused by the Securities and Exchange Commission of embezzling $US700,000 in client funds. The ‘whiz kid’ gained notoriety in the hedge fund industry after announcing the launch of his second $US100 million fund, Wolf Hedge Global Strategy Fund, in December. However, the SEC says Malik was a fraud. He didn’t raise nearly the amount of cash he said he did, refused to give clients their money back, and instead used the cash to support his own upscale lifestyle. Mr. Malik went as far as trying to fake his own death in a letter to a client, writing, “Mr. Malik has been passed away with the heart attack after accident. We will dissolve the fund shortly.”
Is the US seeing a mid-cycle slowdown? (Charles Schwab)
Charles Schwab Senior Vice President and Chief Investment Strategist Liz Ann Sonders notes, “The US economy appears to be in yet another soft patch.” She points to the steep drop in the Citigroup Economic Surprise Index as evidence of the slowdown. Sonders suggests the weakness in the first quarter is at least partly the result of the harsh winter weather, and that growth should rebound mid-year. Investor sentiment has suffered with stock market bullishness, as measured by the American Association of Individual Investors, now at its lowest level since August.
How to identify last-minute tax issues (Financial Planning)
Tax advisors should pay particular attention to 1099 forms now that cost basis gains and losses must be included. While almost all equity options are taxed normally, those of non-equity holdings are treated as 60% long-term and 40% short-term no matter how long they have been held for. Financial Planning suggests the tax payer should make sure “these options are marked-to-market at every year end,” and, “recognise this as the tax treatment offered to exchange-traded futures.”
Brokers brace for new FINRA bonus rule (ThinkAdvisor)
The Financial Industry Regulatory Authority will announce its new broker recruitment compensation rule this summer. FINRA is looking to replace its existing Comprehensive Automated Risk Data System with what ThinkAdvisor calls “a rule-based program that would allow FINRA to collect — on a standardized, automated and regular basis — account information, as well as account activity and security identification information, from firms.”
Market participants are bracing for Wednesday’s Federal Open Market Committee decision. Specifically players will be focused on whether or not the Committee decides to remove the word ‘patient,’ which would signal a Fed rate hike possibly coming at the June meeting. International Monetary Fund Managing Director Christine Lagarde warns “likely volatility in financial markets could give rise to potential stability risks.” Lagarde urges central banks to work together to weather the storm and should not be afraid to provide “temporary — though aggressive” cash infusions if necessary.
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