In March 2009, FT Alphaville riffed on the theme of the generally poor financial and investment decisions made by professional athletes.
By the end of the year, another — although not unrelated — trend had emerged: that of the perils of listening to the financial advice of those paid to play sport.
Consider UK footballer Michael Owen, who somehow found the time to be a global ambassador both for the man formerly known as Sir Allen Stanford and for Dubai:
(Admittedly, even Michael Owen was no match for Lenny Dykstra).
On the other side of the pond, the US Securities and Exchange Commission announced shortly before Christmas that it had filed securities fraud charges against Triton Financial, a Texas-based investment advisor.
FT Alphaville has written about Triton Financial before:
Triton aggressively targeted athletes, through high-level sponsorship deals and a designated “athlete services team” fronted by Ty Detmer, who the firm describes as “one of the greatest college quarterbacks of all time” and assisted by former quarterback Jeff Blake.
According to the SEC statement, Triton used its association with former American football stars to “build a facade of legitimacy and gain investor trust”:
[Triton] raised more than $8.4 million from approximately 90 investors by selling “investor units” in an affiliate, Triton Insurance, and telling investors that their funds would be used to purchase an insurance company. The SEC alleges that these representations were false and investor proceeds were instead misused to pay day-to-day expenses at Triton and its affiliate.
The SEC was alerted to the alleged shenanigans by the Texas State Securities Board, which was itself tipped off by a critical article in the March 2009 issue of Sports Illustrated (which was also the inspiration for the earlier FT Alphaville post):
The article described Triton’s use of former Heisman Trophy winners and NFL players to promote its investments to potential investors, including other football players. The article noted one particular mass e-mail, sent by a former NFL quarterback to numerous NFL alumni, that discussed Triton’s activities and touted Triton’s returns on its investments. According to the SEC’s complaint, the defendants provided the TSSB with altered and fabricated documents during the examination that followed the article’s publication.
The defendants, including the firm’s founder and chief executive Kurt Barton, have not admitted to or denied the SEC’s allegations.
Nonetheless:
the defendants have consented to permanent injunctions against future securities fraud violations. They have also consented to appointment of a receiver and to orders freezing their assets, prohibiting destruction of documents, and requiring that they provide an accounting.
Related links:
‘The story behind Triton Financial’ is a story with many sides – Statesman.com
Sports stars feel the squeeze as Dubai runs short of cash – Guardian
NBA players’ financial security no slam dunk – The Star
Recession hurts even the savviest of ex-athletes – USA Today