RAYMOND JOSEPH LUCIA...BrokerCheck Report RAYMOND JOSEPH LUCIA Section Title Report Summary Broker Qualifications Registration and Employment History Disclosure Events CRD# 1073284

BrokerCheck Report

RAYMOND JOSEPH LUCIA

Section Title

Report Summary

Broker Qualifications

Registration and Employment History

Disclosure Events

CRD# 1073284

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RAYMOND J. LUCIA

CRD# 1073284

This broker is not currently registered.

Report Summary for this Broker

This report summary provides an overview of the broker's professional background and conduct. Additionalinformation can be found in the detailed report.

Disclosure Events

This broker has been involved in one or moredisclosure events involving certain final criminalmatters, regulatory actions, civil judicial proceedings,or arbitrations or civil litigations.

Are there events disclosed about this broker? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 1

Investment Adviser RepresentativeInformation

https://www.adviserinfo.sec.gov

The information below represents the individual'srecord as a broker. For details on this individual'srecord as an investment adviser representative,visit the SEC's Investment Adviser PublicDisclosure website at



This broker has passed:

1 Principal/Supervisory Exam

1 General Industry/Product Exam

1 State Securities Law Exam

Registration History

This broker was previously registered with thefollowing securities firm(s):

LUCIA FINANCIAL LLCCRD# 37179SAN DIEGO, CA10/2006 - 06/2010

B

FIRST ALLIED SECURITIES, INC.CRD# 32444SAN DIEGO, CA11/2007 - 06/2010

B

SECURITIES AMERICA, INC.CRD# 10205SAN DIEGO, CA09/2002 - 11/2007

B

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1�2020 FINRA. All rights reserved. Report about RAYMOND J. LUCIA.


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Registrations

This section provides the self-regulatory organizations (SROs), states and U.S. territories the broker is currently registered and licensed with, thecategory of each registration, and the date on which the registration became effective. This section also provides, for each firm with which thebroker is currently employed, the address of each branch where the broker works.








Industry Exams this Broker has Passed

This individual has passed 1 principal/supervisory exam, 1 general industry/product exam, and 1 state securities law exam.

This section includes all securities industry exams that the broker has passed. Under limited circumstances, a broker may attain a registrationafter receiving an exam waiver based on exams the broker has passed and/or qualifying work experience. Any exam waivers that the broker hasreceived are not included below.

Exam Category Date

Principal/Supervisory Exams

General Securities Principal Examination 04/08/1997Series 24B

Exam Category Date

General Industry/Product Exams

General Securities Representative Examination 01/15/1983Series 7B

Exam Category Date

State Securities Law Exams

Uniform Securities Agent State Law Examination 05/23/2002Series 63B

Additional information about the above exams or other exams FINRA administers to brokers and other securities professionals can be found atwww.finra.org/brokerqualifications/registeredrep/.





www.finra.org/brokerqualifications/registeredrep/



Professional Designations

This section details that the representative has reported 1 professional designation(s).

Certified Financial Planner

This representative holds or did hold 1 professional designation(s) that may have been used to qualify as an Investment Advisor representative.Please check with the appropriate designation authority for verification that the designation is still in effect. The contact information for theseprofessional designation authorities can be found on the website for the North American Securities Administrators Association athttp://www.nasaa.org





http://www.nasaa.org



Registration History

Registration Dates Firm Name CRD# Branch Location

The broker previously was registered with the following securities firms:

B 10/2006 - 06/2010 LUCIA FINANCIAL LLC 37179 SAN DIEGO, CA

B 11/2007 - 06/2010 FIRST ALLIED SECURITIES, INC. 32444 SAN DIEGO, CA

B 09/2002 - 11/2007 SECURITIES AMERICA, INC. 10205 SAN DIEGO, CA

B 01/2006 - 02/2006 HELIX TRADING LLC 37179 SAN DIEGO, CA

B 04/1996 - 09/2002 THE ADVISORS GROUP, INC. 14035 BETHESDA, MD

B 06/1994 - 05/1996 JOHN HANCOCK MUTUAL LIFE INSURANCECOMPANY

5181 BOSTON, MA

B 08/1991 - 05/1996 JOHN HANCOCK DISTRIBUTORS, INC. 468 BOSTON, MA

B 09/1992 - 07/1993 FIRST WALL STREET CORP. 13024 LA JOLLA, CA

B 01/1983 - 08/1991 PENN MUTUAL EQUITY SERVICES, INC. 4031 HORSHAM, PA

Employment History

Employment Employer Name Investment RelatedPosition Employer Location

This section provides up to 10 years of an individual broker's employment history as reported by the individual broker on the most recently filedForm U4.

Please note that the broker is required to provide this information only while registered with FINRA or a national securities exchangeand the information is not updated via Form U4 after the broker ceases to be registered. Therefore, an employment end date of"Present" may not reflect the broker's current employment status.

12/2009 - Present RAYMOND J LUCIA ENTERPRISES PRESIDENT N SAN DIEGO, CA, UnitedStates

10/1994 - Present RAYMOND J. LUCIA COMPANIES, INC PRESIDENT N SAN DIEGO, CA, UnitedStates

08/1988 - Present RAYMOND J. LUCIA GENERAL PARTNER-LIMITED PARTNER

N SAN DIEGO, CA, UnitedStates

03/1997 - 12/2011 VANCE JACKSON LTD GENERAL PARTNEROF GENERALPARTNERDISTRIBUTION (1099)

Y LAGUNA HILLS, CA, UnitedStates







Employment History, continued

Employment Employer Name Investment RelatedPosition Employer Location

GENERAL PARTNEROF GENERALPARTNERDISTRIBUTION (1099)

01/1993 - 12/2011 ROCKY HEMINGWAY HOUSE, LTD. GENERAL PARTNEROF GENERALPARTNERSHIP (1099)

Y AUSTIN, TX, United States

01/1993 - 12/2011 ROCKY SPANISH KEYS I, LTD. GENERAL PARTNEROF GENERALPARTNERSHIP (1099)


10/1990 - 12/2011 CIMARRON VENTURES LTD / ROCKYMIDLAND LTD

GENERAL PARTNEROF GENERALPARTNERDISTRIBUTION (1099)







Disclosure Events

What you should know about reported disclosure events:

1. Disclosure events in BrokerCheck reports come from different sources:• As mentioned at the beginning of this report, information contained in BrokerCheck comes from brokers, their employing firms, and

regulators. When more than one source reports information for the same disclosure event, all versions of the event will appear in theBrokerCheck report. The different versions are separated by a solid line with the reporting source labeled.

For your convenience, below is a matrix of the number and status of regulatory disclosure events involving this broker. Furtherinformation regarding these events can be found in the subsequent pages of this report. You also may wish to contact the broker toobtain further information regarding these events.

Final On Appeal

Regulatory Event 1 0






Disclosure Event Details

This report provides the information exactly as it was reported to CRD and therefore some of the specific data fields contained in the report maybe blank if the information was not provided to CRD.

Regulatory - Final

This type of disclosure event involves a final, formal proceeding initiated by a regulatory authority (e.g., a state securities agency, self-regulatoryorganization, federal regulator such as the Securities and Exchange Commission, foreign financial regulatory body) for a violation of investment-related rules or regulations.

Disclosure 1 of 1

Reporting Source: Regulator

Regulatory Action InitiatedBy:

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Sanction(s) Sought: Cease and DesistOther: N/A

Date Initiated: 09/05/2012

Docket/Case Number: 3-15006

Employing firm when activityoccurred which led to theregulatory action:

RAYMOND J. LUCIA COMPANIES, INC.

Product Type: No Product

Allegations: SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT RELEASE 40-30193, SEPTEMBER 5, 2012: THE SECURITIES ANDEXCHANGE COMMISSION ("COMMISSION") DEEMED IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940("ADVISERS ACT"), AND SECTION 9(B) OF THE INVESTMENT COMPANY ACTOF 1940 ("INVESTMENT COMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR.("LUCIA").

THE DIVISION OF ENFORCEMENT ALLEGED THAT: LUCIA'S FIRM WASREGISTERED WITH THE COMMISSION AS AN INVESTMENT ADVISER FROMSEPTEMBER 2002 THROUGH DECEMBER 2011. IN MAY 2010, THE FIRMSOLD ITS BUSINESS AND TRANSFERRED ITS CLIENT ACCOUNTS TOANOTHER INVESTMENT ADVISER REGISTERED WITH THE COMMISSION.LUCIA CURRENTLY IS A REGISTERED INVESTMENT ADVISERREPRESENTATIVE AT THE OTHER INVESTMENT ADVISER.

ON HIS RADIO SHOW AND WEBSITE, AT SEMINARS, AND IN HIS BOOKS,LUCIA DISCUSSES HIS PROPRIETARY WEALTH MANAGEMENT STRATEGY,WHICH HE CALLS "BUCKETS OF MONEY" ("BOM"). A RECURRING THEME ISTHAT THE BOM STRATEGY WILL ENHANCE ONE'S ABILITY TO RETIRE INCOMFORT AND SAFETY, PROTECT THE MONEY ONE HAS SPENT ALIFETIME ACCUMULATING, AND GENERATE INFLATION-ADJUSTED INCOMEFOR LIFE.

TO SUPPORT THEIR CLAIMS ABOUT THE BOM STRATEGY, RESPONDENTSCLAIMED TO HAVE EXTENSIVELY "BACKTESTED" IT. DESPITE THE CLAIMSTHEY MADE TO THE PUBLIC, THE RESPONDENTS PERFORMED SCANT, IFANY, BACKTESTING OF THE BOM STRATEGY.

RESPONDENTS HELD NUMEROUS SEMINARS PROMOTING THEIR BOMSTRATEGY IN AN EFFORT TO OBTAIN ADVISORY CLIENTS WHO WOULD BECHARGED FEES IN RETURN FOR RESPONDENTS' ADVISORY SERVICES.RESPONDENTS PROMOTED THE BOM STRATEGY BY USING A LENGTHYSIDESHOW AT THE SEMINAR PRESENTATIONS, AFTER PROMOTING THOSESEMINAR PRESENTATIONS ON LUCIA'S RADIO SHOW AND WEBSITES.

SPREADSHEETS PURPORTEDLY VALIDATED THE SLIDESHOW'S CENTRALPREMISE-THAT THE BOM STRATEGY WOULD HAVE PROVIDED SUPERIOROUTCOMES ACROSS HISTORICAL TIME PERIODS THAN OTHERINVESTMENT STRATEGIES, AND IS A SUPERIOR INVESTMENT STRATEGYGOING FORWARD. IT WAS MATERIALLY MISLEADING FOR RESPONDENTSTO CLAIM THAT THEIR ALLEGED BACKTESTING VALIDATED THE BOMSTRATEGY. AMONG OTHER REASONS, RESPONDENTS DO NOT APPEAR TOHAVE ENGAGED IN THE "NUMEROUS" BACKTESTS AND DO NOT APPEARTO HAVE "PROVEN" THAT THE BOM INVESTMENT STRATEGY WORKS.

WHILE ACKNOWLEDGING THE IMPORTANCE OF FEES, RESPONDENTS DIDNOT DISCLOSE TO INVESTORS THAT THEIR BACKTESTING, WHICH ISPURPORTEDLY VALIDATED BY THE SPREADSHEETS, DID NOT INCLUDEADVISORY FEES. IN THE CALCULATIONS FOR THE SPREADSHEETS,RESPONDENTS FAILED TO REALLOCATE ASSETS AFTER THE BOND ANDREIT BUCKETS WERE EXHAUSTED. AS A RESULT, A SUBSTANTIAL PORTIONOF THE HYPOTHETICAL PORTFOLIO WAS FULLY INVESTED IN THE STOCKMARKET. THIS RESULTED IN OVERSTATING THE PERFORMANCE OF THEBOM STRATEGY, AND MATERIALLY MISREPRESENTED THE RESULTS THATCOULD BE EXPECTED FROM THE BOM STRATEGY. AT ITS SEMINARS, THEFIRM PRESENTED PERFORMANCE CALCULATIONS FOR SEVERALDIFFERENT ALLOCATION STRATEGIES WHICH PURPORT TODEMONSTRATE THE SUPERIOR PERFORMANCE OF THE BOM STRATEGYOVER CERTAIN TIME PERIODS. THE ONLY DOCUMENTATION OF THOSECALCULATIONS WHICH THE FIRM RETAINED, HOWEVER, CONSISTS OFTWO TWO-PAGE EXCEL SPREADSHEETS WHICH FAIL TO DUPLICATE THEADVERTISED INVESTMENT STRATEGY. THE CALCULATIONS FAIL TOPROVIDE FOR THE REALLOCATION OF ASSETS THAT IS ONE OF THEHALLMARKS OF THE BOM STRATEGY.

AS A RESULT OF THE CONDUCT, LUCIA WILLFULLY AIDED AND ABETTEDAND CAUSED THE FIRM'S VIOLATIONS OF SECTIONS 206(1), 206(2) AND206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5) PROMULGATEDTHEREUNDER; AND LUCIA WILLFULLY AIDED AND ABETTED AND CAUSEDTHE FIRM'S VIOLATIONS OF SECTIONS 206(1), 206(2) AND 206(4) OF THEADVISERS ACT, AND RULE 206(4)-1(A)(5) PROMULGATED THEREUNDER.






SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT RELEASE 40-30193, SEPTEMBER 5, 2012: THE SECURITIES ANDEXCHANGE COMMISSION ("COMMISSION") DEEMED IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940("ADVISERS ACT"), AND SECTION 9(B) OF THE INVESTMENT COMPANY ACTOF 1940 ("INVESTMENT COMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR.("LUCIA").













SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT RELEASE 40-30193, SEPTEMBER 5, 2012: THE SECURITIES ANDEXCHANGE COMMISSION ("COMMISSION") DEEMED IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940("ADVISERS ACT"), AND SECTION 9(B) OF THE INVESTMENT COMPANY ACTOF 1940 ("INVESTMENT COMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR.("LUCIA").








Current Status: Final

Resolution: Order

Resolution Date: 06/16/2020

Sanctions Ordered:

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

Yes

Bar (Permanent)Cease and DesistCivil and Administrative Penalty(ies)/Fine(s)Prohibition

Action Appealed To: Federal Court

Date Appeal filed: 10/05/2015

Appeal Limitation Details:

If the regulator is the SEC,CFTC, or an SRO, did theaction result in a finding of awillful violation or failure tosupervise?

Yes

No






(1) willfully violated anyprovision of the SecuritiesAct of 1933, the SecuritiesExchange Act of 1934, theInvestment Advisers Act of1940, the InvestmentCompany Act of 1940, theCommodity Exchange Act, orany rule or regulation underany of such Acts, or any ofthe rules of the MunicipalSecurities Rulemaking Board,or to have been unable tocomply with any provision ofsuch Act, rule or regulation?

No

(2) willfully aided, abetted,counseled, commanded,induced, or procured theviolation by any person ofany provision of theSecurities Act of 1933, theSecurities Exchange Act of1934, the InvestmentAdvisers Act of 1940, theInvestment Company Act of1940, the CommodityExchange Act, or any rule orregulation under any of suchActs, or any of the rules ofthe Municipal SecuritiesRulemaking Board? or

Yes

No






Regulator Statement SEC INITIAL DECISION RELEASE 495, JULY 8, 2013: IT IS ORDERED THATTHE REGISTRATION OF LUCIA AS AN INVESTMENT ADVISER IS REVOKED.LUCIA IS PERMANENTLY BARRED FROM ASSOCIATION WITH INVESTMENTADVISERS, BROKERS, OR DEALERS. LUCIA SHALL CEASE AND DESISTFROM AIDING AND ABETTING OR CAUSING THE COMMISSION OF, ANYVIOLATIONS OR FUTURE VIOLATIONS OF SECTIONS 206(1), 206(2), AND206(4) OF THE ADVISERS ACT AND SHALL PAY A CIVIL MONEY PENALTY OF$50,000. ON AUGUST 8, 2013, THE COMMISSION, ON ITS OWN INITIATIVE,REMANDED THE CASE FOR FINDINGS AS TO THE THREE ADDITIONALALLEGED MISREPRESENTATIONS.

SEC INITIAL DECISION RELEASE 540, DECEMBER 6, 2013: THE INITIALDECISION ON REMAND SUPPLEMENTS THE JULY 8, 2013 INITIAL DECISIONAND CONFIRMS LUCIA AIDED AND ABETTED HIS FIRM'S VIOLATIONS OFSECTIONS 206(1), 206(2), AND 206(4) OF THE ADVISERS ACT, ANDSUSTAINED THE SANCTIONS ISSUED EARLIER. THE DECISION FOUNDTHAT LUCIA DID NOT VIOLATE SECTIONS 204 OR RULES 204-2(A)(16) AND206(4)-1(A)(5) THEREUNDER.

ON DECEMBER 27, 2013, LUCIA APPEALED THE INITIAL DECISION, AND THESEC CROSS-APPEALED.

SEC ADMIN RELEASE 34-75837, SEPTEMBER 3, 2015: THE COMMISSIONISSUED OPINION AND SUSTAINED ALL THE SANCTIONS ISSUED EARLIER.

ON OCTOBER 5, 2015, LUCIA APPEALED TO THE U.S. COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT (Case No. 15-1345).

SEC ADMIN RELEASE 34-76241, OCTOBER 22, 2015: LUCIA'S REQUEST FORA STAY OF THE SEPTEMBER 3, 2015 ORDER WAS DENIED. The bar is in effectpending the appeal.

August 9, 2016, the U.S. Circuit Court of Appeals denied the petition for review.

February 16, 2017, the judgment filed on August 9, 2016 was vacated.

June 26, 2017, the petition for review was denied.

July 21, 2017, the matter was appealed to the U.S. Supreme Court (Case No. 17-130).

July 23, 2018, the U.S. Supreme Court issued a judgment and remanded thematter back to the U.S. Circuit Court of Appeals.

August 15, 2018, the U.S. Circuit Court of Appeals vacated the June 26, 2017judgment. It was ordered that the Commission's decision and order be set aside,and the case be remanded to the SEC for a new hearing.

June 16, 2020, the Securities and Exchange Commission ("Commission") issuedan order making findings and imposing remedial sanctions and cease-and-desistorder pursuant to section 15(b) of the Securities Exchange Act of 1934, Sections203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940, and Section 9(b)of the Investment Company Act of 1940, after the proceeding remanded back tothe Commission.

Respondent has submitted an Offer of Settlement, which the Commission hasdetermined to accept.

Lucia willfully aided and abetted and caused Raymond J. Lucia Companies, Inc.'sviolations, of Advisers Act Sections 206(1), 206(2), and 206(4), and Rule 206(4)-1(a)(5).

Accordingly, it is ordered that Lucia cease and desist from committing or causingany violations and any future violations of Sections 206(1), 206(2), 206(4) of theAdvisers Act and Rules 206(4)-1(a)(5) thereunder.

Lucia be, and hereby is barred from association with any broker, dealer,investment adviser, municipal securities dealer, municipal advisor, transfer agent,or nationally recognized statistical rating organization.

Prohibited from serving or acting as an employee, officer, director, member of anadvisory board, investment adviser or depositor of, or principal underwriter for, aregistered investment company or affiliated person of such investment adviser,depositor, or principal underwriter; with a right to apply for reentry after three (3)years to the appropriate self-regulatory organization, or if there is none, to theCommission.

Lucia shall pay a civil money penalty of $25,000.00 to the Commission.

(3) failed reasonably tosupervise another personsubject to your supervision,with a view to preventing theviolation by such person ofany provision of theSecurities Act of 1933, theSecurities Exchange Act of1934, the InvestmentAdvisers Act of 1940, theInvestment Company Act of1940, the CommodityExchange Act, or any rule orregulation under any suchActs, or any of the rules ofthe Municipal SecuritiesRulemaking Board?

No

Capacities Affected: association with a broker, dealer, investment adviser, municipal securities dealer,municipal advisor, transfer agent, or NRSRO

Duration: Indefinite

Start Date: 06/16/2020

End Date:

Sanction 1 of 1

Sanction Type: Bar (Permanent)

Monetary Related Sanction: Civil and Administrative Penalty(ies)/Fine(s)

Total Amount: $25,000.00

Portion Levied againstindividual:

$25,000.00

Date Paid by individual:

Was any portion of penaltywaived?

No

Amount Waived:

Monetary Sanction 1 of 1

Payment Plan:

Is Payment Plan Current:






Regulator Statement SEC INITIAL DECISION RELEASE 495, JULY 8, 2013: IT IS ORDERED THATTHE REGISTRATION OF LUCIA AS AN INVESTMENT ADVISER IS REVOKED.LUCIA IS PERMANENTLY BARRED FROM ASSOCIATION WITH INVESTMENTADVISERS, BROKERS, OR DEALERS. LUCIA SHALL CEASE AND DESISTFROM AIDING AND ABETTING OR CAUSING THE COMMISSION OF, ANYVIOLATIONS OR FUTURE VIOLATIONS OF SECTIONS 206(1), 206(2), AND206(4) OF THE ADVISERS ACT AND SHALL PAY A CIVIL MONEY PENALTY OF$50,000. ON AUGUST 8, 2013, THE COMMISSION, ON ITS OWN INITIATIVE,REMANDED THE CASE FOR FINDINGS AS TO THE THREE ADDITIONALALLEGED MISREPRESENTATIONS.
























SEC INITIAL DECISION RELEASE 495, JULY 8, 2013: IT IS ORDERED THATTHE REGISTRATION OF LUCIA AS AN INVESTMENT ADVISER IS REVOKED.LUCIA IS PERMANENTLY BARRED FROM ASSOCIATION WITH INVESTMENTADVISERS, BROKERS, OR DEALERS. LUCIA SHALL CEASE AND DESISTFROM AIDING AND ABETTING OR CAUSING THE COMMISSION OF, ANYVIOLATIONS OR FUTURE VIOLATIONS OF SECTIONS 206(1), 206(2), AND206(4) OF THE ADVISERS ACT AND SHALL PAY A CIVIL MONEY PENALTY OF$50,000. ON AUGUST 8, 2013, THE COMMISSION, ON ITS OWN INITIATIVE,REMANDED THE CASE FOR FINDINGS AS TO THE THREE ADDITIONALALLEGED MISREPRESENTATIONS.



















iReporting Source: Firm



Sanction(s) Sought: Cease and Desist










RAYMOND J LUCIA COMPANIES, INC.


Allegations: RAYMOND J LUCIA COMPANIES, INC. ("RJLC") VIOLATED SECTIONS 206(1),206(2) AND 206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5)PROMULGATED THEREUNDER; LUCIA AIDED AND ABETTED AND CAUSEDRJLC'S VIOLATIONS OF SECTIONS 206(1), 206(2) AND 206(4) OF THEADVISERS ACT, AND RULE 206(4)-1(A)(5) PROMULGATED THEREUNDER;LUCIA AIDED AND ABETTED AND CAUSED RJLC'S VIOLATIONS OFSECTIONS 206(1), 206(2) AND 206(4) OF THE ADVISERS ACT, AND RULE206(4)-1(A)(5) PROMULGATED THEREUNDER; AND RJLC VIOLATEDSECTION 204 OF THE ADVISERS ACT AND RULE 204-2(A)(16)PROMULGATED THEREUNDER.

Current Status: Pending

Firm Statement SEC INITIAL DECISION RELEASE 495, JULY 8, 2013: IT IS ORDERED THAT,PURSUANT TO SECTION 203(E) OF THE ADVISERS ACT, THE REGISTRATIONOF LUCIA AS AN INVESTMENT ADVISER IS REVOKED. LUCIA ISPERMANENTLY BARRED FROM ASSOCIATION WITH INVESTMENTADVISERS, BROKERS, OR DEALERS. LUCIA SHALL CEASE AND DESISTFROM AIDING AND ABETTING OR CAUSING THE COMMISSION OF, ANYVIOLATIONS OR FUTURE VIOLATIONS OF SECTIONS206(1), 206(2), AND 206(4) OF THE ADVISERS ACT AND SHALL PAY A CIVILMONEY PENALTY IN THE AMOUNT OF $50,000. PAYMENT OF PENALTIES,DISGORGEMENT, PLUS INTEREST, SHALL BE MADE ON THE FIRST DAYFOLLOWING THE DAY THE INITIAL DECISION BECOMES FINAL. THE INITIALDECISION SHALL BECOME EFFECTIVE IN ACCORDANCE WITH ANDSUBJECT TO THE PROVISIONS OF RULE 360 OF THE COMMISSION'SRULES OF PRACTICE, 17 C.F.R. §201.360. PURSUANT TO THAT RULE, MR. LUCIA MAY FILE A PETITION FORREVIEW OF THIS INITIAL DECISION WITHIN TWENTY-ONE DAYS AFTERSERVICE OF THE INITIAL DECISION. MR. LUCIA MAY ALSO FILE A MOTIONTO CORRECT A MANIFEST ERROR OF FACT WITHIN TEN DAYS OF THEINITIAL DECISION, PURSUANT TO RULE 111 OF THE COMMISSION'S RULESOF PRACTICE, 17 C.F.R. § 201.111. IF A MOTION TO CORRECT A MANIFESTERROR OF FACT IS FILED BY MR. LUCIA, THEN HE WILL HAVE 21 DAYS TOFILE A PETITION FOR REVIEW FROM THE DATE OF THE ORDER RESOLVINGTHE MOTION TO CORRECT MANIFEST ERROR OF FACT. THE INITIALDECISION WILL NOT BECOME FINAL UNTIL THE COMMISSION ENTERS ANORDER OF FINALITY. THE COMMISSION WILL ENTER AN ORDER OFFINALITY UNLESS MR. LUCIA FILES A PETITION FOR REVIEW OR MOTIONTO CORRECT MANIFEST ERROR OF FACT OR THE SEC DETERMINES ONITS OWN INITIATIVE TO REVIEW THE DECISION.IT SHOULD BE NOTED THAT THERE IS NO ALLEGATION OR FINDING IN THEINITIAL DECISION THAT ANY INVESTOR ACCOUNT WAS MISHANDLED INANY WAY, OR THAT ANY INVESTOR SUFFERED ANY MONETARY LOSS AS ARESULT OF THE VIOLATIONS. PRIOR TO THE INTIAL ORDER BEINGENTERED, THERE WERE NO CUSTOMER COMPLAINTS RELATED TO THEPOWERPOINT PRESENTATION WHICH WAS THE SUBJECT OF THEALLEGATIONS.






SEC INITIAL DECISION RELEASE 495, JULY 8, 2013: IT IS ORDERED THAT,PURSUANT TO SECTION 203(E) OF THE ADVISERS ACT, THE REGISTRATIONOF LUCIA AS AN INVESTMENT ADVISER IS REVOKED. LUCIA ISPERMANENTLY BARRED FROM ASSOCIATION WITH INVESTMENTADVISERS, BROKERS, OR DEALERS. LUCIA SHALL CEASE AND DESISTFROM AIDING AND ABETTING OR CAUSING THE COMMISSION OF, ANYVIOLATIONS OR FUTURE VIOLATIONS OF SECTIONS206(1), 206(2), AND 206(4) OF THE ADVISERS ACT AND SHALL PAY A CIVILMONEY PENALTY IN THE AMOUNT OF $50,000. PAYMENT OF PENALTIES,DISGORGEMENT, PLUS INTEREST, SHALL BE MADE ON THE FIRST DAYFOLLOWING THE DAY THE INITIAL DECISION BECOMES FINAL. THE INITIALDECISION SHALL BECOME EFFECTIVE IN ACCORDANCE WITH ANDSUBJECT TO THE PROVISIONS OF RULE 360 OF THE COMMISSION'SRULES OF PRACTICE, 17 C.F.R. §201.360. PURSUANT TO THAT RULE, MR. LUCIA MAY FILE A PETITION FORREVIEW OF THIS INITIAL DECISION WITHIN TWENTY-ONE DAYS AFTERSERVICE OF THE INITIAL DECISION. MR. LUCIA MAY ALSO FILE A MOTIONTO CORRECT A MANIFEST ERROR OF FACT WITHIN TEN DAYS OF THEINITIAL DECISION, PURSUANT TO RULE 111 OF THE COMMISSION'S RULESOF PRACTICE, 17 C.F.R. § 201.111. IF A MOTION TO CORRECT A MANIFESTERROR OF FACT IS FILED BY MR. LUCIA, THEN HE WILL HAVE 21 DAYS TOFILE A PETITION FOR REVIEW FROM THE DATE OF THE ORDER RESOLVINGTHE MOTION TO CORRECT MANIFEST ERROR OF FACT. THE INITIALDECISION WILL NOT BECOME FINAL UNTIL THE COMMISSION ENTERS ANORDER OF FINALITY. THE COMMISSION WILL ENTER AN ORDER OFFINALITY UNLESS MR. LUCIA FILES A PETITION FOR REVIEW OR MOTIONTO CORRECT MANIFEST ERROR OF FACT OR THE SEC DETERMINES ONITS OWN INITIATIVE TO REVIEW THE DECISION.IT SHOULD BE NOTED THAT THERE IS NO ALLEGATION OR FINDING IN THEINITIAL DECISION THAT ANY INVESTOR ACCOUNT WAS MISHANDLED INANY WAY, OR THAT ANY INVESTOR SUFFERED ANY MONETARY LOSS AS ARESULT OF THE VIOLATIONS. PRIOR TO THE INTIAL ORDER BEINGENTERED, THERE WERE NO CUSTOMER COMPLAINTS RELATED TO THEPOWERPOINT PRESENTATION WHICH WAS THE SUBJECT OF THEALLEGATIONS.

iReporting Source: Broker



Sanction(s) Sought: Cease and DesistCivil and Administrative Penalty(ies)/Fine(s)




RAYMOND J LUCIA COMPANIES, INC.


Allegations: SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT OF 1940 RELEASE 30193,SEPTEMBER 5, 2012:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMEDIT APPROPRIATE AND IN THE PUBLIC INTERESTTHAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENTADVISERS ACT OF 1940 ("ADVISERS ACT"), AND SECTION 9(B) OF THEINVESTMENT COMPANY ACT OF 1940 ("INVESTMENTCOMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR., AND HIS FORMERINVESTMENT ADVISER FIRM (COLLECTIVELY,"RESPONDENTS"). THE DIVISION OF ENFORCEMENT ALLEGES THAT: THEFIRM IS A CALIFORNIA CORPORATION LOCATED INSAN DIEGO, CALIFORNIA. THE FIRM WAS REGISTERED WITH THECOMMISSION AS AN INVESTMENT ADVISER FROMSEPTEMBER 2002 THROUGH DECEMBER 2011. IN MAY 2010, THE FIRMSOLD ITS BUSINESS AND TRANSFERRED ITS CLIENTACCOUNTS TO ANOTHER INVESTMENT ADVISER, WHICH IS REGISTEREDWITH THE COMMISSION. LUCIA CURRENTLY IS AREGISTERED INVESTMENT ADVISER REPRESENTATIVE AT THE OTHERINVESTMENT ADVISER. SINCE 1991, LUCIA HASHOSTED A DAILY RADIO SHOW WHICH WAS NATIONALLY SYNDICATED IN2000 AND IS NOW SIMULTANEOUSLY PODCAST.LUCIA ALSO APPEARS FREQUENTLY AS A COMMENTATOR ON A VARIETYOF TELEVISION PROGRAMS AND IS FEATURED ONTWO WEBSITES. IN ADDITION, LUCIA WAS THE FEATURED SPEAKER ATREGULAR SEMINARS HOSTED BY THE FIRM ACROSSTHE COUNTRY. THESE SEMINARS WERE PROMOTED ON LUCIA'S RADIOSHOW AND WEBSITE. IN ADDITION, LUCIA HASWRITTEN THREE BOOKS ON INVESTING FOR RETIREMENT: BUCKETS OFMONEY: HOW TO RETIRE IN COMFORT AND SAFETY(2004), READY? SET? RETIRE! (2007), AND THE BUCKETS OF MONEYRETIREMENT SOLUTION: THE ULTIMATE GUIDE TOINCOME FOR LIFE (2010). ON HIS RADIO SHOW AND WEBSITE, ATSEMINARS, AND IN HIS BOOKS, LUCIA DISCUSSES HISPROPRIETARY WEALTH MANAGEMENT STRATEGY, WHICH HE CALLS "BUCKETS OF MONEY" ("BOM"). LUCIA'S COMMENTS ARENOT LIMITED TO DISCUSSIONS OF THE BOM STRATEGY, BUT ARECURRING THEME IS THAT THE BOM STRATEGY WILLENHANCE ONE'S ABILITY TO RETIRE IN COMFORT AND SAFETY, PROTECTTHE MONEY ONE HAS SPENT A LIFETIMEACCUMULATING, AND GENERATE INFLATION-ADJUSTED INCOME FOR LIFE.TO SUPPORT THEIR CLAIMS ABOUT THE BOMSTRATEGY, RESPONDENTS CLAIMED TO HAVE EXTENSIVELY "BACKTESTED" IT. BACKTESTING IS GENERALLY UNDERSTOODAS THE PROCESS OF EVALUATING A STRATEGY, THEORY, OR MODEL BYAPPLYING IT TO HISTORICAL DATA. BACKTESTINGCALCULATES HOW A STRATEGY WOULD HAVE PERFORMED IF IT HADACTUALLY BEEN APPLIED IN THE PAST. THUS, ABACKTEST MUST UTILIZE THE ACTUAL DATA FROM THE TIME IN QUESTIONIN ORDER TO GET AN ACCURATE RESULT.DESPITE THE CLAIMS THEY MADE TO THE PUBLIC, THE RESPONDENTSPERFORMED SCANT, IF ANY, BACKTESTING OF THEBOM STRATEGY. RESPONDENTS HAVE ADMITTED THAT THE ONLYTESTING THEY PERFORMED INVOLVED: (1) SOMECALCULATIONS LUCIA PERFORMED MANUALLY IN THE LATE 1990S,COPIES OF WHICH NO LONGER EXIST; (2) A SO-CALLED"BACKTEST" FOR THE PERIOD FROM 1966 TO 2003, MEMORIALIZED ON ATWO PAGE EXCEL SPREADSHEET, WHICH WASPERFORMED BY A FIRM EMPLOYEE IN 2003 (THE "1966 SPREADSHEET");AND (3) A SO-CALLED "BACKTEST" FOR THE PERIODFROM 1973 TO 2003, MEMORIALIZED ON A TWO PAGE EXCELSPREADSHEET, WHICH WAS PERFORMED BY THE SAME FIRMEMPLOYEE, ALSO IN 2003 (THE "1973 SPREADSHEET"). RESPONDENTSHELD NUMEROUS SEMINARS PROMOTING THEIR BOMSTRATEGY IN AN EFFORT TO OBTAIN ADVISORY CLIENTS WHO WOULD BECHARGED FEES IN RETURN FOR RESPONDENTS'ADVISORY SERVICES. RESPONDENTS PROMOTED THE BOM STRATEGY BYUSING A LENGTHY SIDESHOW AT THE SEMINARPRESENTATIONS, AFTER PROMOTING THOSE SEMINAR PRESENTATIONSON LUCIA'S RADIO






SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT OF 1940 RELEASE 30193,SEPTEMBER 5, 2012:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMEDIT APPROPRIATE AND IN THE PUBLIC INTERESTTHAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENTADVISERS ACT OF 1940 ("ADVISERS ACT"), AND SECTION 9(B) OF THEINVESTMENT COMPANY ACT OF 1940 ("INVESTMENTCOMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR., AND HIS FORMERINVESTMENT ADVISER FIRM (COLLECTIVELY,"RESPONDENTS"). THE DIVISION OF ENFORCEMENT ALLEGES THAT: THEFIRM IS A CALIFORNIA CORPORATION LOCATED INSAN DIEGO, CALIFORNIA. THE FIRM WAS REGISTERED WITH THECOMMISSION AS AN INVESTMENT ADVISER FROMSEPTEMBER 2002 THROUGH DECEMBER 2011. IN MAY 2010, THE FIRMSOLD ITS BUSINESS AND TRANSFERRED ITS CLIENTACCOUNTS TO ANOTHER INVESTMENT ADVISER, WHICH IS REGISTEREDWITH THE COMMISSION. LUCIA CURRENTLY IS AREGISTERED INVESTMENT ADVISER REPRESENTATIVE AT THE OTHERINVESTMENT ADVISER. SINCE 1991, LUCIA HASHOSTED A DAILY RADIO SHOW WHICH WAS NATIONALLY SYNDICATED IN2000 AND IS NOW SIMULTANEOUSLY PODCAST.LUCIA ALSO APPEARS FREQUENTLY AS A COMMENTATOR ON A VARIETYOF TELEVISION PROGRAMS AND IS FEATURED ONTWO WEBSITES. IN ADDITION, LUCIA WAS THE FEATURED SPEAKER ATREGULAR SEMINARS HOSTED BY THE FIRM ACROSSTHE COUNTRY. THESE SEMINARS WERE PROMOTED ON LUCIA'S RADIOSHOW AND WEBSITE. IN ADDITION, LUCIA HASWRITTEN THREE BOOKS ON INVESTING FOR RETIREMENT: BUCKETS OFMONEY: HOW TO RETIRE IN COMFORT AND SAFETY(2004), READY? SET? RETIRE! (2007), AND THE BUCKETS OF MONEYRETIREMENT SOLUTION: THE ULTIMATE GUIDE TOINCOME FOR LIFE (2010). ON HIS RADIO SHOW AND WEBSITE, ATSEMINARS, AND IN HIS BOOKS, LUCIA DISCUSSES HISPROPRIETARY WEALTH MANAGEMENT STRATEGY, WHICH HE CALLS "BUCKETS OF MONEY" ("BOM"). LUCIA'S COMMENTS ARENOT LIMITED TO DISCUSSIONS OF THE BOM STRATEGY, BUT ARECURRING THEME IS THAT THE BOM STRATEGY WILLENHANCE ONE'S ABILITY TO RETIRE IN COMFORT AND SAFETY, PROTECTTHE MONEY ONE HAS SPENT A LIFETIMEACCUMULATING, AND GENERATE INFLATION-ADJUSTED INCOME FOR LIFE.TO SUPPORT THEIR CLAIMS ABOUT THE BOMSTRATEGY, RESPONDENTS CLAIMED TO HAVE EXTENSIVELY "BACKTESTED" IT. BACKTESTING IS GENERALLY UNDERSTOODAS THE PROCESS OF EVALUATING A STRATEGY, THEORY, OR MODEL BYAPPLYING IT TO HISTORICAL DATA. BACKTESTINGCALCULATES HOW A STRATEGY WOULD HAVE PERFORMED IF IT HADACTUALLY BEEN APPLIED IN THE PAST. THUS, ABACKTEST MUST UTILIZE THE ACTUAL DATA FROM THE TIME IN QUESTIONIN ORDER TO GET AN ACCURATE RESULT.DESPITE THE CLAIMS THEY MADE TO THE PUBLIC, THE RESPONDENTSPERFORMED SCANT, IF ANY, BACKTESTING OF THEBOM STRATEGY. RESPONDENTS HAVE ADMITTED THAT THE ONLYTESTING THEY PERFORMED INVOLVED: (1) SOMECALCULATIONS LUCIA PERFORMED MANUALLY IN THE LATE 1990S,COPIES OF WHICH NO LONGER EXIST; (2) A SO-CALLED"BACKTEST" FOR THE PERIOD FROM 1966 TO 2003, MEMORIALIZED ON ATWO PAGE EXCEL SPREADSHEET, WHICH WASPERFORMED BY A FIRM EMPLOYEE IN 2003 (THE "1966 SPREADSHEET");AND (3) A SO-CALLED "BACKTEST" FOR THE PERIODFROM 1973 TO 2003, MEMORIALIZED ON A TWO PAGE EXCELSPREADSHEET, WHICH WAS PERFORMED BY THE SAME FIRMEMPLOYEE, ALSO IN 2003 (THE "1973 SPREADSHEET"). RESPONDENTSHELD NUMEROUS SEMINARS PROMOTING THEIR BOMSTRATEGY IN AN EFFORT TO OBTAIN ADVISORY CLIENTS WHO WOULD BECHARGED FEES IN RETURN FOR RESPONDENTS'ADVISORY SERVICES. RESPONDENTS PROMOTED THE BOM STRATEGY BYUSING A LENGTHY SIDESHOW AT THE SEMINARPRESENTATIONS, AFTER PROMOTING THOSE SEMINAR PRESENTATIONSON LUCIA'S RADIO






SEC ADMIN RELEASE 34-67781, IA RELEASE 3456, INVESTMENT COMPANYACT OF 1940 RELEASE 30193,SEPTEMBER 5, 2012:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMEDIT APPROPRIATE AND IN THE PUBLIC INTERESTTHAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED PURSUANT TO SECTION 15(B) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS203(E), 203(F) AND 203(K) OF THE INVESTMENTADVISERS ACT OF 1940 ("ADVISERS ACT"), AND SECTION 9(B) OF THEINVESTMENT COMPANY ACT OF 1940 ("INVESTMENTCOMPANY ACT"), AGAINST RAYMOND J. LUCIA, SR., AND HIS FORMERINVESTMENT ADVISER FIRM (COLLECTIVELY,"RESPONDENTS"). THE DIVISION OF ENFORCEMENT ALLEGES THAT: THEFIRM IS A CALIFORNIA CORPORATION LOCATED INSAN DIEGO, CALIFORNIA. THE FIRM WAS REGISTERED WITH THECOMMISSION AS AN INVESTMENT ADVISER FROMSEPTEMBER 2002 THROUGH DECEMBER 2011. IN MAY 2010, THE FIRMSOLD ITS BUSINESS AND TRANSFERRED ITS CLIENTACCOUNTS TO ANOTHER INVESTMENT ADVISER, WHICH IS REGISTEREDWITH THE COMMISSION. LUCIA CURRENTLY IS AREGISTERED INVESTMENT ADVISER REPRESENTATIVE AT THE OTHERINVESTMENT ADVISER. SINCE 1991, LUCIA HASHOSTED A DAILY RADIO SHOW WHICH WAS NATIONALLY SYNDICATED IN2000 AND IS NOW SIMULTANEOUSLY PODCAST.LUCIA ALSO APPEARS FREQUENTLY AS A COMMENTATOR ON A VARIETYOF TELEVISION PROGRAMS AND IS FEATURED ONTWO WEBSITES. IN ADDITION, LUCIA WAS THE FEATURED SPEAKER ATREGULAR SEMINARS HOSTED BY THE FIRM ACROSSTHE COUNTRY. THESE SEMINARS WERE PROMOTED ON LUCIA'S RADIOSHOW AND WEBSITE. IN ADDITION, LUCIA HASWRITTEN THREE BOOKS ON INVESTING FOR RETIREMENT: BUCKETS OFMONEY: HOW TO RETIRE IN COMFORT AND SAFETY(2004), READY? SET? RETIRE! (2007), AND THE BUCKETS OF MONEYRETIREMENT SOLUTION: THE ULTIMATE GUIDE TOINCOME FOR LIFE (2010). ON HIS RADIO SHOW AND WEBSITE, ATSEMINARS, AND IN HIS BOOKS, LUCIA DISCUSSES HISPROPRIETARY WEALTH MANAGEMENT STRATEGY, WHICH HE CALLS "BUCKETS OF MONEY" ("BOM"). LUCIA'S COMMENTS ARENOT LIMITED TO DISCUSSIONS OF THE BOM STRATEGY, BUT ARECURRING THEME IS THAT THE BOM STRATEGY WILLENHANCE ONE'S ABILITY TO RETIRE IN COMFORT AND SAFETY, PROTECTTHE MONEY ONE HAS SPENT A LIFETIMEACCUMULATING, AND GENERATE INFLATION-ADJUSTED INCOME FOR LIFE.TO SUPPORT THEIR CLAIMS ABOUT THE BOMSTRATEGY, RESPONDENTS CLAIMED TO HAVE EXTENSIVELY "BACKTESTED" IT. BACKTESTING IS GENERALLY UNDERSTOODAS THE PROCESS OF EVALUATING A STRATEGY, THEORY, OR MODEL BYAPPLYING IT TO HISTORICAL DATA. BACKTESTINGCALCULATES HOW A STRATEGY WOULD HAVE PERFORMED IF IT HADACTUALLY BEEN APPLIED IN THE PAST. THUS, ABACKTEST MUST UTILIZE THE ACTUAL DATA FROM THE TIME IN QUESTIONIN ORDER TO GET AN ACCURATE RESULT.DESPITE THE CLAIMS THEY MADE TO THE PUBLIC, THE RESPONDENTSPERFORMED SCANT, IF ANY, BACKTESTING OF THEBOM STRATEGY. RESPONDENTS HAVE ADMITTED THAT THE ONLYTESTING THEY PERFORMED INVOLVED: (1) SOMECALCULATIONS LUCIA PERFORMED MANUALLY IN THE LATE 1990S,COPIES OF WHICH NO LONGER EXIST; (2) A SO-CALLED"BACKTEST" FOR THE PERIOD FROM 1966 TO 2003, MEMORIALIZED ON ATWO PAGE EXCEL SPREADSHEET, WHICH WASPERFORMED BY A FIRM EMPLOYEE IN 2003 (THE "1966 SPREADSHEET");AND (3) A SO-CALLED "BACKTEST" FOR THE PERIODFROM 1973 TO 2003, MEMORIALIZED ON A TWO PAGE EXCELSPREADSHEET, WHICH WAS PERFORMED BY THE SAME FIRMEMPLOYEE, ALSO IN 2003 (THE "1973 SPREADSHEET"). RESPONDENTSHELD NUMEROUS SEMINARS PROMOTING THEIR BOMSTRATEGY IN AN EFFORT TO OBTAIN ADVISORY CLIENTS WHO WOULD BECHARGED FEES IN RETURN FOR RESPONDENTS'ADVISORY SERVICES. RESPONDENTS PROMOTED THE BOM STRATEGY BYUSING A LENGTHY SIDESHOW AT THE SEMINARPRESENTATIONS, AFTER PROMOTING THOSE SEMINAR PRESENTATIONSON LUCIA'S RADIO

Current Status: Pending

Broker Statement CONTINUED FROM #7) THE 1966 AND 1973 SPREADSHEETS PURPORTEDLYVALIDATE THE SLIDESHOW'S CENTRAL PREMISE -THAT THE BOM INVESTMENT STRATEGY WOULD HAVE PROVIDEDSUPERIOR OUTCOMES ACROSS HISTORICAL TIME PERIODSTHAN OTHER INVESTMENT STRATEGIES, AND THUS, IS A SUPERIORINVESTMENT STRATEGY GOING FORWARD. FOR SEVERALREASONS, IT WAS MATERIALLY MISLEADING FOR RESPONDENTS TOCLAIM THAT THEIR ALLEGED BACKTESTING VALIDATEDTHE BOM STRATEGY. AMONG OTHER REASONS, RESPONDENTS DO NOTAPPEAR TO HAVE ENGAGED IN THE "NUMEROUS"BACKTESTS AND DO NOT APPEAR TO HAVE "PROVEN" THAT THE BOMINVESTMENT STRATEGY WORKS. IN PRESENTING THERESULTS OF THE PURPORTED 1966 AND 1973 BACKTESTS,RESPONDENTS DISCLOSED THAT THEY USED A HYPOTHETICAL3% INFLATION RATE, ALTHOUGH THEY USED ACTUAL HISTORICAL DATAFOR RETURNS ON STOCKS AND BONDS. LUCIAADMITTEDLY KNEW THAT USING A LOWER INFLATION RATE FOR THEBACKTESTS WOULD MAKE THE RESULTS LOOK MOREFAVORABLE FOR THE BOM STRATEGY. MOREOVER, ACTUAL FIGURES FORTHE INFLATION RATE DURING THE TIME PERIOD1966 THROUGH 2003 WERE READILY AVAILABLE FROM THE DEPARTMENTOF LABOR WHEN RESPONDENTS PERFORMED THECALCULATIONS IN 2003. RESPONDENTS DID NOT MAKE ANY PROVISION INTHE 1966 AND 1973 SPREADSHEETS FORADVISORY FEES. WHILE ACKNOWLEDGING THE IMPORTANCE OF FEES,RESPONDENTS DID NOT DISCLOSE TO INVESTORSTHAT THEIR BACKTESTING, WHICH IS PURPORTEDLY VALIDATED BY THE1966 AND 1973 SPREADSHEETS, DID NOT INCLUDEADVISORY FEES. IN THE CALCULATIONS FOR THE 1966 AND 1973SPREADSHEETS, RESPONDENTS FAILED TO REALLOCATEASSETS AFTER THE BOND AND REIT BUCKETS WERE EXHAUSTED. AS ARESULT, A SUBSTANTIAL PORTION OF THEHYPOTHETICAL PORTFOLIO WAS FULLY INVESTED IN THE STOCK MARKETFROM 1981 TO 2003 (IN THE 1966 SPREADSHEET)AND FROM 1986 TO 2003 (IN THE 1973 SPREADSHEET). THIS RESULTED INOVERSTATING THE PERFORMANCE OF THE BOMSTRATEGY, AND MATERIALLY MISREPRESENTED THE RESULTS THATCOULD BE EXPECTED FROM THE BOM STRATEGY. AT ITSSEMINARS, THE FIRM PRESENTED PERFORMANCE CALCULATIONS FORSEVERAL DIFFERENT ALLOCATION STRATEGIES WHICHPURPORT TO DEMONSTRATE THE SUPERIOR PERFORMANCE OF THE BOMSTRATEGY OVER CERTAIN TIME PERIODS. THE ONLYDOCUMENTATION OF THOSE CALCULATIONS WHICH THE FIRM RETAINED,HOWEVER, CONSISTS OF TWO TWO-PAGE EXCELSPREADSHEETS WHICH FAIL TO DUPLICATE THE ADVERTISEDINVESTMENT STRATEGY. THE CALCULATIONS FAIL TO PROVIDEFOR THE REALLOCATION OF ASSETS THAT IS ONE OF THE HALLMARKS OFTHE BOM STRATEGY. AS A RESULT OF THECONDUCT, THE FIRM WILLFULLY VIOLATED SECTIONS 206(1), 206(2)AND206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5)PROMULGATED THEREUNDER; LUCIA WILLFULLY AIDED ANDABETTED AND CAUSED THE FIRM'S VIOLATIONS OF SECTIONS 206(1),206(2) AND 206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5)PROMULGATED THEREUNDER;LUCIA WILLFULLY AIDED AND ABETTED AND CAUSED THE FIRM'SVIOLATIONS OF SECTIONS 206(1), 206(2) AND 206(4) OFTHE ADVISERS ACT, AND RULE 206(4)-1(A)(5) PROMULGATEDTHEREUNDER; AND THE FIRM WILLFULLY VIOLATED SECTION204 OF THE ADVISERS ACT AND RULE 204-2(A)(16) PROMULGATEDHEREUNDER. IT IS ORDERED THAT THE ADMINISTRATIVELAW JUDGE SHALL ISSUE AN INITIAL DECISION NO LATER THAN 300 DAYSFROM THE DATE OF SERVICE OF THIS ORDER,PURSUANT TO RULE 360(A)(2) OF THE COMMISSION'S RULES OFPRACTICE.






CONTINUED FROM #7) THE 1966 AND 1973 SPREADSHEETS PURPORTEDLYVALIDATE THE SLIDESHOW'S CENTRAL PREMISE -THAT THE BOM INVESTMENT STRATEGY WOULD HAVE PROVIDEDSUPERIOR OUTCOMES ACROSS HISTORICAL TIME PERIODSTHAN OTHER INVESTMENT STRATEGIES, AND THUS, IS A SUPERIORINVESTMENT STRATEGY GOING FORWARD. FOR SEVERALREASONS, IT WAS MATERIALLY MISLEADING FOR RESPONDENTS TOCLAIM THAT THEIR ALLEGED BACKTESTING VALIDATEDTHE BOM STRATEGY. AMONG OTHER REASONS, RESPONDENTS DO NOTAPPEAR TO HAVE ENGAGED IN THE "NUMEROUS"BACKTESTS AND DO NOT APPEAR TO HAVE "PROVEN" THAT THE BOMINVESTMENT STRATEGY WORKS. IN PRESENTING THERESULTS OF THE PURPORTED 1966 AND 1973 BACKTESTS,RESPONDENTS DISCLOSED THAT THEY USED A HYPOTHETICAL3% INFLATION RATE, ALTHOUGH THEY USED ACTUAL HISTORICAL DATAFOR RETURNS ON STOCKS AND BONDS. LUCIAADMITTEDLY KNEW THAT USING A LOWER INFLATION RATE FOR THEBACKTESTS WOULD MAKE THE RESULTS LOOK MOREFAVORABLE FOR THE BOM STRATEGY. MOREOVER, ACTUAL FIGURES FORTHE INFLATION RATE DURING THE TIME PERIOD1966 THROUGH 2003 WERE READILY AVAILABLE FROM THE DEPARTMENTOF LABOR WHEN RESPONDENTS PERFORMED THECALCULATIONS IN 2003. RESPONDENTS DID NOT MAKE ANY PROVISION INTHE 1966 AND 1973 SPREADSHEETS FORADVISORY FEES. WHILE ACKNOWLEDGING THE IMPORTANCE OF FEES,RESPONDENTS DID NOT DISCLOSE TO INVESTORSTHAT THEIR BACKTESTING, WHICH IS PURPORTEDLY VALIDATED BY THE1966 AND 1973 SPREADSHEETS, DID NOT INCLUDEADVISORY FEES. IN THE CALCULATIONS FOR THE 1966 AND 1973SPREADSHEETS, RESPONDENTS FAILED TO REALLOCATEASSETS AFTER THE BOND AND REIT BUCKETS WERE EXHAUSTED. AS ARESULT, A SUBSTANTIAL PORTION OF THEHYPOTHETICAL PORTFOLIO WAS FULLY INVESTED IN THE STOCK MARKETFROM 1981 TO 2003 (IN THE 1966 SPREADSHEET)AND FROM 1986 TO 2003 (IN THE 1973 SPREADSHEET). THIS RESULTED INOVERSTATING THE PERFORMANCE OF THE BOMSTRATEGY, AND MATERIALLY MISREPRESENTED THE RESULTS THATCOULD BE EXPECTED FROM THE BOM STRATEGY. AT ITSSEMINARS, THE FIRM PRESENTED PERFORMANCE CALCULATIONS FORSEVERAL DIFFERENT ALLOCATION STRATEGIES WHICHPURPORT TO DEMONSTRATE THE SUPERIOR PERFORMANCE OF THE BOMSTRATEGY OVER CERTAIN TIME PERIODS. THE ONLYDOCUMENTATION OF THOSE CALCULATIONS WHICH THE FIRM RETAINED,HOWEVER, CONSISTS OF TWO TWO-PAGE EXCELSPREADSHEETS WHICH FAIL TO DUPLICATE THE ADVERTISEDINVESTMENT STRATEGY. THE CALCULATIONS FAIL TO PROVIDEFOR THE REALLOCATION OF ASSETS THAT IS ONE OF THE HALLMARKS OFTHE BOM STRATEGY. AS A RESULT OF THECONDUCT, THE FIRM WILLFULLY VIOLATED SECTIONS 206(1), 206(2)AND206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5)PROMULGATED THEREUNDER; LUCIA WILLFULLY AIDED ANDABETTED AND CAUSED THE FIRM'S VIOLATIONS OF SECTIONS 206(1),206(2) AND 206(4) OF THE ADVISERS ACT, AND RULE 206(4)-1(A)(5)PROMULGATED THEREUNDER;LUCIA WILLFULLY AIDED AND ABETTED AND CAUSED THE FIRM'SVIOLATIONS OF SECTIONS 206(1), 206(2) AND 206(4) OFTHE ADVISERS ACT, AND RULE 206(4)-1(A)(5) PROMULGATEDTHEREUNDER; AND THE FIRM WILLFULLY VIOLATED SECTION204 OF THE ADVISERS ACT AND RULE 204-2(A)(16) PROMULGATEDHEREUNDER. IT IS ORDERED THAT THE ADMINISTRATIVELAW JUDGE SHALL ISSUE AN INITIAL DECISION NO LATER THAN 300 DAYSFROM THE DATE OF SERVICE OF THIS ORDER,PURSUANT TO RULE 360(A)(2) OF THE COMMISSION'S RULES OFPRACTICE.






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