Adviser with national radio show misled prospective clients, SEC says

Los Angeles financial adviser Ray Lucia, host of a nationally syndicated daily radio program, gave misleading information for several years about his “Buckets of Money” investment strategy for retirement savings, the Securities and Exchange Commission alleged Wednesday. During investment seminars for prospective clients, Mr. Lucia claimed that his “extensive back-testing” of the strategy during bear markets showed that using it would offer future retirees inflation-adjusted income while protecting or even enhancing their retirement savings, the SEC said in its administrative complaint. Mr. Lucia and his firm, then called Raymond J. Lucia Cos. Inc., performed “scant, if any, actual back-tests,” the SEC said. “Lucia and RJL left their seminar attendees with a false sense of comfort about 'Buckets of Money,' ” said Michele Wein Layne, director of the SEC's Los Angeles Regional Office. “The so-called back-tests weren't really back-tests, and the strategy wasn't proven as they claimed.” Mr. Lucia's attorney, Michael Perlis, said his client plans to fight the allegations. In addition, he said, Mr. Lucia has rejected several settlements offers since the commission's investigation began two years ago in favor of the chance to clear his name. “We are interested in litigation and vindication,” said Mr. Perlis, a former SEC assistant enforcement director. “These government proceedings have an impact on reputations, and the fact is there have been no investor complaints.” When the SEC approached Mr. Lucia about his description of the “Buckets of Money” strategy, he stopped using the information, even though he did not believe it was necessary, Mr. Perlis said. The regulator is seeking a cease-and-desist order against something his client hasn't done in two years, he said. In its complaint calling for an administrative hearing, the SEC said it will seek to have Mr. Lucia pay an appropriate civil penalty. Mr. Lucia began The Ray Lucia Show in 1991; it was syndicated nationwide in 2000.