The Securities and Exchange Commission announced today that it has initiated administrative proceedings against longtime San Diego financial radio and television personality Ray Lucia for allegedly spreading misleading information to support his "Buckets of Money'' investment strategy.
The SEC alleges Lucia defrauded prospective investors at seminars by telling them that his method was back-tested -- meaning that it was checked against historical financial data from past bear markets -- when little such research had actually been performed.
Lucia left seminar attendees with "a false sense of comfort'' about the Buckets of Money strategy, said Michele Wein Layne, regional 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,'' she said.
According to the SEC -- which named Lucia and his former company, Raymond J. Lucia Cos., in its filing -- Lucia told retirees that their nest eggs would grow and provide a hedge against inflation. However, the limited amount of research that was performed used historically low inflation rates and did not calculate advisory fees that clients would be charged, according to the agency.
The SEC contends that Lucia performed some calculations on his strategy in the late 1990s, with copies no longer available, and produced a pair of two-page spreadsheets.
