As Aequitas Capital Management, a firm that formerly reported $1.7 billion in managed assets, continues its collapse with an alleged SEC investigation, one of the many financial advisers that pushed, recommended or sold Aequitas to customers has issued an apology, of sorts.
"I cannot begin to tell you how sorry we are in having to share this news and how angry and disappointed we are in Aequitas," Chris Bean wrote to one investor as Aequitas, which has at least $300 million in outstanding notes that were sold to private investors mostly through a network of financial advisers, continued its dramatic decline.
Notwithstanding the hindsight-as-20/20 dialogue, InvestmentNews writer Jeff Benjamin dug deeper into the Aequitas fiasco and concluded: "Aequitas meltdown underscores the importance of due diligence, caution."
Benjamin immediately identified the problem of "if it's to good to be true, it probably is," noting that selling unregistered, high-paying debt instruments (e.g., Aequitas) was just part of the problem. It turned out that Aequitas' business of buying hard-to-collect debt from businesses like colleges and hospitals is, well, hard to do.
In 2014, a judge ordered Aequitas to set aside nearly $2.5 million ahead of a lawsuit related to a portfolio of student loans.
Yet even in the loan interest order's aftermath, Aequitas portrayed a positive face, hosting summits and taking in new investors as recently as January.
In the aftermath of Aequitas' fall, adviser Bean speculated that Aequitas overstated its assets and used proceeds of some loans to lend money to other Aequitas expansion efforts, some of which were "hemorrhaging money."
If you have invested through a financial adviser, broker or firm in Aequitas Capital Management or another property with significant red flags (such as an order to set aside millions of dollars ahead of a lawsuit) or other irregularities that you believe could have changed the course of your investment decision if discovered and disclosed, or you received recommendations or advisement to invest in an unregistered or high-risk security even through your investment objectives and risk tolerance level was conservative, and this improperly added risk has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.