Non-licensed but still advising

Dan Levin's radio show is called “Investment Talk,” but since last September, he hasn't had a license to sell investments as a broker. And he's not been licensed to give investment advice as an adviser since last June. That would make it pretty tough to talk about investments with clients, wouldn't it? This year, I brought attention to advisers who had been kicked out of the industry by regulators but were still trying to drum up work as investment “coaches” or “teachers.” In the case of Mr. Levin, a former adviser is hanging on to the investment advice business by hiding in plain sight as a weekend radio show host.

SUSPENDED, FINED

Mr. Levin's career in the investment advice industry appears all but over. He hasn't been affiliated with a broker-dealer for almost a year and the Financial Industry Regulatory Authority Inc. slapped him with a five-month suspension and $30,000 fine this month for a variety of rule violations for statements he made on his radio show and website several years ago. But as a radio show host, he appears to continue to hold himself out as an investment professional. On the website for one of the Dallas radio stations that broadcasts “Investment Talk,” 570-KLIF AM, Mr. Levin is described as having had a solid 30-year career in the investment industry. “Dan has remained both consistent and stable for his clients,” according to the website. “Dan specializes in helping his clients work toward achieving their financial goals. After thorough analysis, he creates a detailed investment portfolio emphasizing diversification, asset allocation and alternative investments.” The website makes no mention of his recent suspension and problems with Finra. The radio station's website contains a link to Mr. Levin's home page, investmenttalk.org, which features “Dan Levin and his team.” It also highlights services and planning processes, which include “identify investment experience,” “research and analysis” and “review selection of products.” A receptionist in Mr. Levin's office answered the phone last week with a greeting of “Berthel Fisher,” a broker-dealer that terminated Mr. Levin's registration last year. The receptionist said all she could say is that more than one person works at Berthel Fisher & Co. Financial Services Inc. and that she would take a message for Mr. Levin. In a follow-up call last Thursday, the secretary, who did not give her name, said, “I don't think he's interested in commenting.” Vince Louwagie, a Berthel Fisher attorney, said the greeting was “just a receptionist error.” “Dan and Berthel Fisher brokers share a receptionist,” Mr. Louwagie said. “The receptionist simply made a mistake in the name she answered the phone. Dan doesn't work for Berthel Fisher.” Mr. Levin spent the bulk of his recent career registered with Milkie/Ferguson Investments Inc., one of the dozens of defunct broker-dealers that sold fraudulent private placements before the credit crisis.

TOUTS HIGH-RISK OFFERINGS

The action Finra took against Mr. Levin this month was for violating advertising and solicitation rules stemming from statements he made on his radio show about high-risk investments such as life settlements and private placements. According to the Finra order, Mr. Levin made some whoppers. Indeed, Finra calls them “unwarranted and misleading claims.” Mr. Levin in July 2008 “Investment Talk” radio shows: “Life settlement ... best investments I've seen in 25 years, bar none.” “I think the risk of your principal is virtually zero.” “I want you to make 15% to 18% on your money with little risk.” “I've talked to my friends ... the oil and gas experts here, and they say there are no risks.” “In my opinion, we can't lose.” Mr. Levin's defunct website, lifesettlementsource.net, also has some doozies about life settlements, which the Finra order calls "unbalanced statements.” “Its relatively low-risk, potentially high-yield return has offered many investors a great diversification tool and the opportunity to "hedge' against the volatility of the stock market,” the website stated, according to the order. That statement violated Finra rules that communications with the public “must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular security.” Mr. Levin consented to the Finra suspension and fine order without admitting or denying allegations. A Texas State Securities Board official, Patty Loutherback, confirmed that Mr. Levin has no license to work as a broker or investment adviser in Texas. She added that he maintains a license to sell insurance. Mr. Levin's show, remember, is called “Investment Talk”; it's not titled “Insurance Talk.” On the program, Mr. Levin “is basically talking about insurance products and educational type stuff,” said his attorney, Dave Clouston. “He's not selling any securities.” “Finra is very aware of what he's doing,” Mr. Clouston said. “We think he's compliant right now. No one has told us differently, but we're always open to suggestions.”

DISCLOSURES QUESTIONED

InvestmentNews could not find recordings or transcripts of Mr. Levin's more recent radio broadcasts. But the Finra order calls sharply into question Mr. Levin's work on the radio. What type of disclosure does Mr. Levin make on his broadcast regarding his lack of legal status to give financial advice? How close to giving investment advice does he come during his program? When asked about Mr. Levin's disclosure — or lack thereof — that he has no broker-dealer or investment adviser registrations, Mr. Clouston responded: “I don't know what he's doing right now. I think he's a compliant guy. I think his goal is to serve out the suspension and get licensed with a broker-dealer again.” Two Dallas radio stations that broadcast Mr. Levin's “Investment Talk” program, 570-KLIF and WBAP, did not respond to phone calls and e-mails requesting comment. KLIF and WBAP should disclose Mr. Levin's history of professional problems to their listeners, who have the right to know that as soon as Mr. Levin opens his mouth to speak, he is no longer a licensed investment adviser.