Hi this is Gena Lofton and I have an
amazing securities attorney that I would love to share with all of you this show
is all about helping you invest and minimize your risk so I wanted to
interview a securities attorney here in Beverly Hills his name is Phil Phil
would you like to introduce yourself to my audience and talk a little bit about
your firm here in Beverly Hills almost a Boulevard and what is it that you do
sure my name is Phil Aidikoff and we are in the offices of Aidikoff Uhl & Bakhtiari here in Beverly Hills our practice is limited to representing
folks who have claims against the financial securities industry I see how
did you get into doing what you do a complete goof thing happened I used to
be a civil litigator and I had a client who I did a lot of civil litigation for
who called me one day and said I got a problem with my brokerage firm can you
help me and I said I don’t know a stock from a bond let me see what I can do so
I started asking around and I couldn’t find anybody and finally one of my then
partners and another firm said you know I went camping with this guy and I think
that’s what he does so he ends up coming to the office to meet me not only did he
do this for a living that was Bob Ewell but he also lived half a block away from
me and in fact he knew my wife because they walked dogs together in the morning
I mean it was really bizarre Wow we started doing some business he ended up
moving into our suite and then when I wanted to do just this kind of work Bob
and I moved into this building 23 24 years ago Wow Wow that’s amazing it is
it’s a lot of construction going on here I guess that’s for the new Metro it’s
the subway the subway okay it’s only gonna be going on for seven more years that’s if they get done on time oh well
you know by that time they won’t need subway because we’ll have self-driving
you bet right and we’ll learn to flap are exactly hilarious so um well unless
you like you a lot because I actually drove to Beverly Hills which I normally
don’t drive in Los Angeles because of the traffic but I wanted to take my
youth Porsche out for a little spin today so um so that’s great um can you
talk a little bit about what is FINRA I hear that a lot true it’s an acronym yes
madam it’s an acronym for the Financial Industry Regulatory Authority FINRA used
to be called the NASD and maybe 10 12 years ago I’m not sure exactly when they
changed the name from the NASD etc and FINRA is a self regulatory authority
that deals with brokers and brokerage firms in other words anyone who’s a
broker of series 7 license and anyone who is a broker dealer has to be a
signatory to the FINRA agreement I see so just for all of your background how I
found fill I was literally was looking for an attorney finding who does what in
the legal profession takes a little bit of kind of you know covert operation so
to speak because it’s not very easy so I came across fill really just going
through the internet and looking to see who does what um and anyway so what type
of clientele fill do you actually um provide services to sure well we provide
services to customers of brokerage firms and financial institutions we also
provide legal representation to executives and brokers against the
firm’s I’m never on the firm side so I’m always adverse to the financial services
industry gotcha can you kind of give us a little bit of an example what your
typical case type would be on the customer side generally it involves some
wrongdoing by the brokerage firm in connection with customers and as I
mentioned to you earlier we are very selective in the cases we take we do our
homework upfront and we only take less than one in five cases that we see so we
do our research we do our homework and then if we decide to offer up
presentation to a customer it’s in connection with wrongful activity that
the customer was involved with brokerage firm it I see okay
on the other side on the employee side or the management side the broker side
those are termination claims in other words let’s say you’re a broker or your
aim an executive and you are working for a firm and for some reason there’s a
termination claim we then represent that person against the firm as well I see I
see no that’s that’s helpful we also represent municipalities we represent
institutions also against the financial services industry
I gotcha okay and are you from are you licensed just in California is that how
the I’m not an attorney I apologize so I don’t know how not something you own any
buddy I’m really trying to understand like how legal structure is with the
Department of Justice and you’re under that no real hierarchy no not really the
way it works is we are licensed by States so for example I’m licensed in
the state of California my partner Ryan Bakhtiari
is licensed in California New York Texas and maybe one or two other states but in
FINRA cases you do not have to be licensed in every state that’s one of
the things that make our practice so unusual so for example right now we have
cases going on in fifteen or sixteen different states around the country
representing customers and the and the executives of different firms around the
country there are a few states where we can represent someone in that state but
we have to be admitted through either a process involving a licensed attorney in
that state or on application to FINRA I see so we practice all over the country
interesting interesting and you’ve been doing this for how many years I’ve been
doing this for about thirty years and about 25 years exclusively Wow Wow so
that’s all we do there interesting are you married
can Sam Mary want kids grandkids one moment the silat are you from California
originally no I was born in Brooklyn really Wow
my father ever did was moved to LA when I was seven years old oh my goodness Wow
well you’ve been here for a long time yep went to school here went to school
here I went to college up at Cal and then I went to law school here in LA
excellent Wow all right so let’s talk a little bit about asset allocation and
can you describe first of all what is asset allocation and maybe some of the
types of assets asset allocation many folks consider to be the single most
important component of investment strategy and all refers to is how you
divide your assets between the two major asset classes equities on one side fixed
income and cash on the other side and they have done studies in fact some
folks won the Nobel Prize in Economics for figuring out that 91% of a
portfolios performance has nothing to do with either market timing or stock
picking it’s all about how you divide your assets between the two major
classes the reason it’s so important is because everyone has investment
objectives and everyone has risk tolerances yeah and those are how your
portfolio should be managed so for example if you are a moderate growth and
Income Investor you’re looking at approximately 50% of bonds and fixed
bonds and cash on one side equities on the other side mm-hmm the numbers aren’t
carved in stone so could it be 40 60 or 60 40 short but all of the major
brokerage firms all agree and it’s all in their documentation that asset
allocation is critical so if you are an aggressive investor you’re going to skew
heavier to the equity side if you are a more conservative investor you’re gonna
skew heavier to the fixed income and bond side and that’s the first thing we
look at so if a investor a customer comes to us and they say you know I’ve
lost a lot of money I shouldn’t have been in these in these securities our
first question is where were your investment objectives and your risk
tolerance and let’s see what the percentages that
you were in at the firm are and that’s where we begin our conversation with a
customer who has an asset allocation case I see and I hear alternative
investments a lot can you describe what those are
sure alternative investments is a large category of securities which have
certain things in common with each other and many things not in common with
anything so for example if you were go out to go out today and buy shares of
Apple or Ford or something like that you can buy it today you can sell it this
afternoon you can sell it tomorrow it’s completely liquid mm-hm
an alternative investment generally has certain components one of which is a
lack of liquidity mm-hmm now some alternative investments direct
participation programs private placements those sorts of things reach
those sorts of things have windows where at a certain point in time you can get
out of the investment right if the issuer is willing to let you out of the
investment that’s something that many customers don’t understand right you can
buy or sell stock any time you like but once you check into one of these
alternative investments some have absolutely no market some have a limited
market once twice three times four times a year where you can try to get the
issuer to buy your security back and some are in between right so they are
investments that have certain qualities and certain important features to them
but let’s just say they’re not for everyone yeah I see I see
yeah I actually invested in many of these different types of investments and
I can say that it’s really important that you find out who that partner it
that sponsor or the principal is you on because you’re gonna be married to him
or her right for for for for a very long time it’s there thank you think about
this also you can find out how much a stock is selling for minute-by-minute
yep how do you know how much an alternative investment is worth
it’s not traded on markets yeah so you either are going to the issuer to try to
find out what they say and that’s the old story about ask my mother she’ll
tell you I’m smart good-looking yeah the issuer can tell you anything
they want to tell ya most issuers are legitimate folks run legitimate
businesses yeah but still the valuation is a moving target yeah and that’s one
of the issues because people look at a statement then they say oh I bought XYZ
partnership a year and a half ago in the issuer says it’s worth whatever maybe it
is maybe it isn’t but it’s like it’s like a house right which is your house
worth it’s worth what someone will pay for yep yep absolutely
interesting so I remember back in 2008 during the financial collapse which
started with Lehman Brothers of number 15 fifteen thousand you know can you
believe it’s been 11 years it’s frightening it’s frightening and I mean
we’ve covered I guess pretty well with a lot of the you know quantitative easing
and free money and the Federal Reserve etc etc so do you think that there might
be in a situation that might come about you know likes to sale Black Swan event
that may cause you know another Lehman Brothers in the future I you know I I’m
just I’m always trying to figure out get ahead of things before they happen
and I I’m trying to really you know share this with my audience so they’re
not caught with with without any clothes on when the tide goes down well here’s
what I would say anybody who pretends to predict the future has a whole bunch of
asterisks next to that because nobody can predict the future but we know
certain things we know that right now we are in a bull market that is lasted for
more than a decade we know that right now there are some issues relating to
the inverted yield curve and all sorts of things that some folks believe is a
sign of something to come right is there going to be a correction well there’s
always a correction the question is when is it going to happen and how severe
is going to be nobody predicted what happened in 2008 they predicted a
recession they predicted some stuff was going to go bad but nobody predicted the
kind of downfall the market and society took back beginning in 2008 and really
it didn’t begin in 2008 Here I am in 2007 yes and back in 2007 you may recall
the Bear Stearns hedge fund yes had a real problem yeah in 2007 and that was
the beginning of us beginning to track what was going on so is something going
to happen oh sure something always happens yeah
how severe and when nobody can predict yeah yeah I mean I’m looking back at
2007 so true story um I was closing down new century mortgage and bankruptcy
right in 2004 dove 2007 and I got I was it was very very depressing for me
because it’s it’s a horrible thing to go through to see that and that but that’s
what led me to the TV business actually so then I went to Direct TV in October
of 2007 and helped to grow that TV company and sell it to eighty-five years
ago so on anyway um so yeah so let me ask you this what can someone do to
minimize any risks that they may have you know because no one can tell predict
the future but I’m always interested in what can I do what can the audience do
in order to protect themselves should we have another kind of financial hiccup
and that’s a good question and the answer is it depends on who you are let
me give you an example yeah if you are a 40 year old who’s employed and is
invested significantly in the equity market with some hopefully with some
percentage of fixed income you have plenty of time to recover if something
should go wrong in the markets when it does go wrong if you are a retiree and
let’s say you’re 75 years old you don’t have that kind of window you don’t have
the ability to say okay it’s going to come back in
two years five years ten years twelve years or whatever it is and I’ll be fine
so it’s a very personal situation and that’s why it’s so critical that when
folks invest they invest with someone who understands who they are what their
needs are what their investment objectives are and by needs I mean for
example cash let’s say somebody is retired and they need their portfolio to
produce a certain amount of cash every year that’s one thing but also there are
nests what objectives what kind of risk are they willing to take there’s no
right or wrong right there is absolutely no right or wrong yeah so for example if
you are somebody who is risk adverse and you’re younger you want to be skewed
heavier on the fixed income side even though you’re younger if you are not
risk adverse and you’re older you may say that’s not for me what I want to do
is I want to play the market I want to take chances in the equity markets and
see what happens there’s no right or wrong well here’s what I would say to
you the most important conversation a person can have with their financial
adviser their broker their RIAA whoever is who you are what kind of risk you’re
willing to accept and how the recommended investments fit into that
program yep mm-hmm gotcha well um so thank you so much so
my last and final question is if someone actually needs your services how do they
go about finding you you mean other than a list yeah I do know this the answer is
we have a website which is securities arbitration com okay there’s no space
between securities and arbitration so it’s securities with an S arbitration
com and that’s all contact information it is
a compilation of what we’ve done over the years so you can do some research
and one of the things that we were chatting about earlier is be sure
whoever and this isn’t just in securities law whoever you do business
with has the training experience to do what you need them to do as opposed to
I’ve been on an attorney for 25 years so I can do anything I’m the first one to
say I know how to do one thing that’s all I know
how to do I think I do it pretty well but I only know how to do one thing so
if you come to me with a different kind of problem I’m gonna find someone for
you who can handle your problem as opposed
to me pretending that I can because as I said earlier I get romance by what I
think the numbers are in the case yeah I mean I cannot tell you how grateful I am
to you being very direct your your I mean a lot of attorneys of all walks of
life and I have a lot of attorneys and and you have my deepest sympathy thank
you thank you I really want to say thank you so much Phil and I met I called him
and he was literally extremely direct very quick and you are got to the point
and I really really appreciate you telling me you know what you do versus
what you don’t do because that helps me to get what I need to get done quickly
right there is one other issue too that just occurred to me and we’re talking
earlier about the the customer side but on the management side in terms of the
folks who work for firms brokers and executives they often run into problems
with their firms related to termination matters and those can be very very
tricky and part of the issue comes in to the licensing and how reporting
requirements are because remember if you’re let’s say a broke and you are the
subject of a customer complaint the firm has an obligation to report that to the
regulators to FINRA and to NASA NASA is the organization it’s not two space guys
it’s the it’s the organization of the state regulators and they collectively
operate something called the C or D the Central Registration Depository
that’s the brokers disciplinary record now you can access and this is very
important as a customer you can access broker check right on the FINRA website
which is a redacted version of the CRD I wish you could and you could get to the
CRD well what is this ad that’s called the central
just rationed depository its the brokers disciplinary history and the firm’s
disciplinary history as well and I think people should know as much about who
they’re doing business with as they possibly can right so at least if you
start from broker check which is available on the FINRA website you can
get a pretty good idea of who the broker is and see if they’re the subject of a
lot of complaints if you are able to get to the CR D which we know how to get to
through state regulators it should be available to everybody as far as I’m
concerned why it’s hidden behind the wall I don’t know but it is the reality
is that you have to do some research on the people you’re doing business with
especially the people who are managing your money yes so I would encourage
everybody on the customer side to do research on their broker before they do
any business with that person yeah on the management side on the executive
side part of the problem is that there are brokers who have reporting issues on
their CRD or on their broker check and they can be expunged during a certain
process and we do some of that as well so if we’re representing a broker who
has been included on something that he or she had nothing to do it and that
happens a lot there’s a way to clean up the record but the most important thing
for customers is to do their homework upfront you can go right to broker check
and find out who these folks are see if they have a disciplinary history and
then make a business decision based on what you want the brokers may have a
fiduciary responsibility to their clients is that true
the answer is it depends on the state I fear in California yes there has been a
fiduciary duty for many many years in some states there is no fiduciary duty
in some states there is also kind of eight you know it’s almost a fiduciary
duty but here’s what I would say when I am dealing with a broker representing a
customer I’m dealing with a broker and a customer case and we’re somewhere else
we’re in a state like New York which does not have a fiduciary duty built in
it doesn’t bother me a lot I wish it did but it doesn’t
bother me a lot because when I examine the broker one of the first things I’m
gonna ask the broker is you would agree that you have an obligation to do what’s
in the customers best interest do you think they’re gonna say no yeah exactly
if they say no case is over right okay so as a practical matter the fiduciary
duties important more states are adopting it Nevada just did recently and
other states are adopting it and it should be across the board but it isn’t
however that shouldn’t be the be-all and end-all of the conversation I see um let
me ask you this too some years back there was a butcher customer first law
that was being proposed I have not heard anything more about it does that get
deep proposal as well because Trump came in well I’m not gonna
but it got squelched and instead the SEC is floating what they call the best
interest rule I think which is like being partially pregnant I mean it’s
just it doesn’t accomplish what it’s supposed to accomplish
I see so as a practical matter yes there was a proposal with the fiduciary duty
be across the country Department of Labor and that got dialed back and then
the the newest proposal deals with this best interest rule which is as I said
not quite enough but people should still realize that the brokers have an
obligation to do what’s in the best interest of the customer period I was
always fascinated by put your customer first law because haven’t they been
doing that since the beginning they’re supposed to yeah I was just very weird
yeah you’re supposed to intern and the we have been in in cases over the years
and States word they don’t have a fiduciary duty and I love when the folks
on the other side make that argument because in effect they’re saying we
don’t have to put the customer that’s first isn’t know why didn’t you tell the
customer now it’s about me it’s not about me madam customer I just um it’s
something’s wrong well here’s the here’s the other thing that’s interesting one
of the arguments at the bro which firms have used his gosh if you
put a fiduciary duty law in place we’re not going to be able to do business
because of all the additional requirements we’re in the state of
California okay and this state has had a fiduciary duty for many many years and
somehow the brokerage firms do fine here yeah it’s a nonsensical argument that
I’ve never understood and if you stop to think about it you realize how you see
you see why I had to really share um fill with with you guys as he’s amazing
he’s amazing so thank you so so much for all of your
wisdom and and sharing yourself with my audience I would love to have you back
on the show at any time you would like because you your mind and now you know
where my office is so if you don’t come by it’s your own fault okay no thank you
can I give you a punch it is okay everyone we’re gonna close it down
because I’m gonna actually take Phil to lunch um because he’s been such a
wonderful wonderful um wonderful friend okay I’ll see you
guys later bye bye