More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
A word of advice—if you plan to help clients hide assets from the IRS, don’t inadvertently mail an incriminating list of names and account numbers that somehow ends up in the hands of regulators.
Sounds obvious, but it’s exactly what happened to Swiss financial advisor Beda Singenberger.
Federal prosecutors charge that over an 11-year period, Singenberger helped 60 people in the U.S. hide $184 million in secret offshore accounts, according to Bloomberg. He attached colorful names like Real Cool Investments Ltd. and Wanderlust Foundation.
Then, according to the news service, Singenberger inadvertently mailed a list of his U.S. clients, including their names and other details, which eventually wound up with federal authorities.
Bloomberg says U.S. authorities appear to be picking off the clients on that list one by one. Among those affected: Jacques Wajsfelner, an 83-year-old exile from Nazi Germany, and Michael Canale, a retired U.S. Army surgeon. Another customer, cancer researcher Michael Reiss, pleaded guilty, though his court records don’t mention the list.
“He was sending mail to someone in the United States, and apparently in error he included a list of U.S. taxpayers,” Assistant U.S. Attorney Dan Levy said on March 5 at Wajsfelner's sentencing in New York. “The government has mined that list to great effect and prosecuted a number of people who were on that list.”
Wajsfelner, who pleaded guilty to hiding $5.7 million from the Internal Revenue Service, was sentenced to three months of house arrest.
The case comes as negotiations continue between Swiss banks and U.S. authorities over the latter’s access to once secretive accounts. Long a haven for ultrawealthy individuals and families, the United States has increased pressure in recent years to open accounts of suspected tax cheats.