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These 5 things might have prevented this NBA star from losing $20 million investing with Charles Banks

When now-retired NBA superstar Tim Duncan met investment and winery financier superstar Charles Augustus Banks IV back in 1997, neither man anticipated that their relationship would wind up in a series of lawsuits, legal actions, a federal indictment and litigation by the Securities and exchange commission. Ironically, it was a fax sent by Banks to Duncan that underpinned the indictment.

 

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Things might have turned out differently if Duncan had not lost $20 million of the $27 million he entrusted to Banks.

 

One investment expert says there are important lessons to be learned from this particular case that could help others avoid their own investment disaster.

Warning signs

Yesterday, Wine Industry Insight spoke with Matt Schwegman, founder and owner of Composed Financial Management, PLLC, a Houston, TX-area financial management company who weighed in on five key mistakes that Duncan made that led to the current situation.

 

Schwegman, a soft-spoken CPA and registered investment advisor. said that one key problem with wealth management these days is the emphasis on selling, “There’s not enough emphasis on actual management of wealth or on the level of transparency that clients should expect.”

 

After looking at the court filings, Schwegman concluded that five serious warning signs had been missed:

 

  1. Banks had no professional certifications for investment management
  2. There seem to be no investment monitoring or portfolio performance tracking
  3. Duncan’s investments lacked diversification
  4. The fee structure was unclear
  5. There did not seem to be proper due diligence

The Five Mistakes That Cost Tim Duncan $20M

Click here to read Schwegman’s extensive piece on avoiding the same five mistakes that cost Tim Duncan $20M.