Friday 19th of March 2010

In the past fortnight two advisers have hit the mainstream headlines for their dodgy operations. Stephen Versalko, the former high-living ASB adviser, has dominated  headlines over the past 24 hours with his unbelievable spending on hookers and nice wine. A week before, the Herald wrote about Mike and Jackie Bradley. I’ve been pondering these and it seems that both advisers have been living the high life in Auckland and spending their ill-gotten gains Secondly, neither of them are names that have been well know in the advisory industry. In some ways you expect the advisers who have done well to be known by other advisers. You expect to see them at events like IFA conferences and roadshows. Yet our enquiries suggest that both had almost no industry profile. Another thing, and one which is concerning, is that both advisers had, let’s say, “interesting” approaches to documentation. Reports suggest that the Bradleys had no records at all and the second had a set of highly doctored and controlled records. I do have to wonder aloud (again) whether regulation will help tidy these sorts of things up. As I said in the Weekly Wrap, if someone can work within a highly controlled environment like the ASB Bank and commit this level of fraud, what can be done to stop it? I think the answer is not a lot. If a person is truly interested in committing a fraud they will find some way to do it no matter how tough the rules and regulations are. The other side of the coin is that there just has to be better financial education for the public. The people who suffered in these cases should have been asking more questions and should know what sort of information they should be given. This may seem like a big ask, but one could assume, considering the sums of money involved, that the clients were successful and intelligent people who should have known better.