Also on Wednesday, the U.S. Securities and Exchange Commission filed a civil complaint charging McDonald and Hercules with violations of federal securities law. The PE has risen by about 50% from a year ago. The gap between corporate profits and GDP, or even corporate profits and equity market prices, is wider than its ever been by a long way. McDonald allegedly raised over $5 million and misappropriated funds for personal expenses and Ponzi-like payments. It wasn't immediately clear whether he had an attorney who could speak on his behalf. Lines and paragraphs break automatically. The SECs complaint alleges that McDonald raised over $3.6 million from investors between May 2019 and October 2021, which he told investors would be used to trade securities through an investment vehicle called the Index Strategy Advisors Fund. Legal Statement. I think the phenomena is an anomaly like virtually every pocket of life were in right now. Hercules Investments was founded by James McDonald, who previously was founder and CEO of Index Strategy Advisors. Hercules CEO, CNBC Pundit 'In Hiding' Amid Securities Fraud Charges James Arthur McDonald Jr. appears to be on the lam as he faces as much as 20 years in prison for allegedly defrauding. Which was great for McDonald, because he apparently really muffed the market response to a Joe Biden victory over Donald Trump two years ago: He assumed that the ousting of an incompetent demagogue would tank things. RIA Intel is part of the Euromoney Institutional Investor PLC group. The information provided in this website is offered for general information purposes only; it is not offered as and does not constitute legal advice in any way. All rights reserved. McDonald falsely represented that investor funds would be used to expand Herculess business, lied about the firms financial condition, and failed to disclose that he had promised Hercules clients that the firm would repay earlier losses. Or, you know, anywhere, really. He was direct and asked all the questions that were relevant and provided me with very thoughtful feedback and some useful contacts. Despite the challenges of Covid, equity markets have pushed to all-time highs on most indexes in a fashion that would suggest there is no risk in the market. from 8 AM - 9 PM ET. And, now that you, the Justice Department and the SEC mention it, a lot of his stories sound a bit hard to believe. This site contains attorney advertising. McDonald allegedly raised over $5 million and misappropriated funds for personal expenses and Ponzi-like payments. Hercules Investments was founded by James McDonald, who previously was founder and CEO of Index Strategy Advisors. Quant Research-Driven Investment Strategies For Investors Seeking Active Portfolio Management. Please read our Terms and Conditions, Modern Slavery Act Transparency Statement, and Privacy Policy before using the site. Hercules Investments has named Loreal McDonald as corporate counsel and interim chief operating officer. Key stock indexes, which are market cap based, are near record highs. The SEC further alleges that, from February 2021 to October 2021, McDonald raised $1.5 million through the sale of equity investments in Herculess business. And so, if the market falls say 10%, our allocations will potentially offset the losses in the long only portfolio. How Hercules Investments capitalizes on systematic volatility; The companys risk-hedging technique designed to help financial advisors and clients; How James McDonalds firm helps financial advisors grow their prospects; Hercules Investments ideal client as those who got aggressive growth goals; Allowed HTML tags: . In the S&P 500, you have mega cap tech Covid winners like Microsoft, Amazon, etc. Im a football player disguised as a portfolio manager. Market data provided by Factset. Get this delivered to your inbox, and more info about our products and services. GESCO combines international experience and quality standards with modern technologies and opportunities and local professional service. GESCO is a security company operating in various fields and basing on the principle of physical protection. When typing in this field, a list of search results will appear and be automatically updated as you type. Then its fine. Hercules Investments provides a growth option for investors who need gains and growth, but we offer an element of downside risk protection because equity markets are disconnected from what we know is GDP contraction, debt, and all the uncertainty that comes along with a mutating virus. We do this because we invest in index options, which give us the flexibility to purchase contracts that rise in value when markets fall and to own very misunderstood and often overlooked asset class volatility. James Arthur McDonald Jr., 50, was charged with one count of fraud for bilking clients out of millions of dollars on Sept. 21, 2022. Market data provided by Factset. You've successfully subscribed to this newsletter! In summary, NFLHX provides direct access to risk hedged growth adding a layer of insurance to a portfolio that has appreciated with the market. 165 Broadway 23rd Floor New York City NY, 10006 *by appointment only. Accounting and Auditing Enforcement Releases. "-Sonn Law Group Client. To what extent do multiples deserve to be elevated given ultralow interest rates? McDonald, who faces up to 20 years imprisonment if convicted, is believed to be in hiding, the U.S. Attorneys office said in a news release. When we perform well for the client, we perform well for ourselves. Hercules Investments was awarded the WealthManagement.com 2020 Alternative Asset Manager of the year. Get James McDonald's email address (j*****@post.harvard.edu) and phone number (718848..) at RocketReach. LOS ANGELES, Oct. 10, 2019 /PRNewswire/ -- Award-winning derivatives investment management executive James A. McDonald, Jr. today announced that he has launched Hercules Investments LLC, a Los Angeles-based Registered Investment Advisor.Hercules applies quantitative research to design and actively manage portfolios for investors seeking maximum growth during up or down-market cycles. The affidavit of service states that the summons and complaint were served on James McDonald by service to Beatriz Lima, "as person in charge of the place of business / authorized to accept service on behalf of Hercules Investments, LLC, a California limited liability company at 1718 18 Harriman Lane, #A, Redondo Beach, CA 90278." McDonald was CEO of Hercules Investments LLC of Los Angeles and Index Strategy Advisors Inc. of Redondo Beach, and frequently appeared as an analyst on the CNBC financial TV news network,. And so, equity market prices are assuming earnings that arent there. Now, there are a handful of companies that have flourished in the Covid era, but its a handful of companies. The CEO and chief investment officer of Hercules Investment, a Los Angeles-based RIA, saw his college football career cut short by a catastrophic knee injury that sidelined him for 15 years. Investment adviser firms registered with the SEC may be required to provide to state securities authorities a copy of their Form ADV and any accompanying amendments filed with the SEC. Believe It or Not, Its a Great Time To Be a Financial Advisor, Ares Strikes Deal for Office, Naming Rights at Los Angeles Tower, Musks Twitter Sells Off Coffee Makers, Neon Logo in Auction Blitz. Describe the ideal client profile. Tune in to discover different ways that Hercules Investments can provide you with overlay strategies while giving you market volatility protection! The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against McDonald and Hercules. *Our firm, in some cases, advance costs and expenses of the case, and in that event, are recovered from the gross recovery of any settlement or verdict. The stockbroker and investment fraud lawyers at Sonn Law Group dedicate their entire practice to protecting the interests of investors who have lost money as a result of the negligent or wrongful conduct of those entrusted with protecting and growing our money. The Securities and Exchange Commission today announced the filing of a civil injunctive action against James Arthur McDonald, Jr. and his SEC-registered investment adviser firm, Hercules Investments, LLC in connection with two fraudulent securities offerings. In late 2020, McDonald lost between $30 million and $40 million of Hercules client money after adopting "a risky short position" based on his wrong prediction that the stock market would drop because of the COVID-19 pandemic and the results of the U.S. presidential election, the U.S. attorney's office said. Your email address will not be published. Thats my personal mission. The ideal client would have a portfolio of stocks that have appreciated with the market and while offering great growth potential is susceptible to a market downturn. More on that later. "I spoke to Mr Sonn on a complex legal matter. Powered and implemented by FactSet Digital Solutions. We can deliver these same strategies to investor portfolios with less than $1 million," said Mr. McDonald, Chief Executive Officer of Hercules and previous winner of the Top 10 Advisors Rising Stars award from ETF Report magazine. The leader of Pershing X explains why her experience, leadership style, and the support of BNY Mellon, have positioned the new venture to disrupt how wealth managers do business. Im going to play on my own team and practice. The case status is Pending - Other Pending. Recent filings for HERCULES INVESTMENTS LLC 28 Jun 2019 SI-COMPLETE view 8 Jun 2019 REGISTRATION view In a parallel action, the United States Attorneys Office for the Central District of California announced criminal charges against McDonald. "Robust, quant driven investment strategies are typically only available to Ultra High Net Worth individuals and families with $25 million or more to invest. I think all the equity markets are so overstretched that when a risk element enters the market, the selling will be violent and accelerated. "These are incredibly uncertain times for the stock market and for investors," said James. Hercules Investments won a 2020 Wealthies Award for being the top Alternative Asset Manager. How Should HNW Investors Think About Them? Get 5 free searches. The economy is slowly reopening and more vaccines are reaching people. Today, James not only discusses all things volatility but also explains different risk-related techniques professionals can use to keep clients comfortable with their portfolios in the market.. Prosecutors allege that McDonald concealed massive financial losses from some clients and used some investment money for personal expenses, spending some of it at a Porsche dealership and on a website that sells designer menswear. It takes time to get back up, but we have had renewed waves of lockdowns in the fall and layoffs. Your email address will not be published. Arcadia Man Charged with Securities Fraud for Stealing Client Funds and Concealing His Investment Firms Massive Financial Losses [press release]He appeared as a financial expert on TV. The actual profits that have been generated and the guidance that has increased are based on a small section of the market. Unlike hedge funds, however, a mutual fund is accessible to individual investors and their advisors in a very transparent package. LOS ANGELES, Oct. 10, 2019 /PRNewswire/ -- Award-winning derivatives investment management executive James A. McDonald, Jr. today announced that he has launched Hercules Investments LLC,. Each client and each clients case is unique, and no result or outcome is or can ever be guaranteed. A Division of NBCUniversal. And even still, there is the risk of mutations, the continuation of sickness, hospitalizations, and fear will cause stagnation for the reopening concept. Quotes displayed in real-time or delayed by at least 15 minutes. He appeared as a financial expert on TV. To send us an e-mail, simply complete and submit the online form below. We represent investors in claims against negligent brokers and brokerage firms. We fight to level the playing field between large corporations and the public investor. And this is evidenced by us being at valuation levels weve never touched before, even higher than 1929 and 2000-2001. McDonald will discuss why investors should be prepared for a looming 2021 stock market crash, after an unprecedented stock market surge since the March 2020 Covid-19-driven stock market lows. Moneys thrown into the stock market, not just big caps, theres a whole surge of investing that weve seen, maybe with the beginning of the online trading movement, where there are pockets of individual investors who have moved into investing in a way that is creating tons of frothiness. You can reach us by phone at 844-689-5754 or via e-mail. NE Atlanta, GA 30326 *by appointment only. - The dangers of too much fiscal and monetary stimulus My dream is to buy an NFL team. Number 8860726. James McDonald is a 25-year veteran of the investment industry and was named one of America's top 10 investment advisors by ETF.com in 2012. Subscribe to RIA Intels thrice-weekly newsletter and follow the publication on Twitter and LinkedIn. Charles Canter will lead the litigation. Questions? We are partnering with Nasdaq to put Nasdaq 100 Volatility Index (VOLQ) into our portfolio in a way where investors who have realized great gains from tech can rest assured knowing that in the event of a potential market downturn, our fund will be able to sustain the impact of a declining market and should provide upside. It is a risk-hedged growth mutual fund that captures market appreciation and has the potential for great gains when markets fall. PDF Case Plaintiff Defendant - United States Courts Early life James McDonald was born in Wellhead, Morayshire, in north Scotland on September 23 1840. Because in addition to unemployed, he can also now call himself whistleblower.. McDonald graduated from Harvard University with a Bachelor's degree in Economics. The attorneys at ChapmanAlbin are licensed to practice law in Ohio and Michigan. James McDonald, CEO of Hercules Investments, is using equity index options to profit from an expected surge in volatility and market swings. And what were seeing now is bull market enthusiasm and all types of signs of bubbles in asset prices. All material subject to strictly enforced copyright laws. In late 2020, McDonald lost between $30 million and $40 million of Hercules client money after adopting "a risky short position" based on his wrong prediction that the stock market would drop. The potential for growth is there, but the conditions for growth are not because we are artificially providing income. According to the complaint, McDonald falsely represented that investor funds would be used to expand Hercules's business, lied about the firm's financial condition, and failed to disclose that he had promised Hercules clients that the firm would repay earlier losses. AssetMark CEO Charles Goldman tells RIA Intel that he is focused on acquisitions, helping advisors, and the long term. [USA Today]. Save my name, email, and website in this browser for the next time I comment. All Rights Reserved. The complaint also charges McDonald with violating Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, which prohibit certain transactions by investment advisers. Our strategies offer downside protection and even potential upside gains with protracted market downturns. He argues the stimulus package will fail to rehabilitate the economy and thinks investors are too sanguine about the vaccines rollout, citing logistics and trust issues surrounding the vaccine. Do you still have a 15,000 target on the Dow? So, I think over 75% of the gains in the S&P 500 in 2020 could be attributed to a handful of names. Hercules Investments specializes in actively managed and systematic investment strategies to monetize investment performance from equity market volatility. To ensure the most secure and best overall experience on our website, we recommend the latest versions of, https://us02web.zoom.us/webinar/register/WN_guvDkdmgQcy4-HcSuTnb1Q, https://hercules-investments.com/hercules-public/index.html. Or before an SEC investigator. This inflation will cause interest rates to rise in the medium term or long term and the necessary pullback in the markets will be a result of investors taking risk off the table. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Instead, the SEC alleges, McDonald misappropriated more than $1 million of the funds for personal expenses, including luxury vehicles and paying rent on his home, and misappropriated more than $2 million of the funds for Ponzi-like payments, payments to his Hercules' investment adviser clients and expenses associated with operating Hercules. Contact me online or call anytime at 844-689-5754. I would be thrilled to buy the Washington football team because I grew up in Chevy Chase, Maryland. For a free consultation, please call us now at 866-827-3202or complete ourcontact form. The S&P 500 is trading at about 23 times projected forward earnings. Mr. McDonald previously was CEO/CIO of Index Strategy Advisors Inc. (ISA) from 2010-2019. // Disclaimer. In this virtual event, McDonald shares: - Why the markets are too optimistic about the Covid-19 vaccine Youre describing a giant disconnect between the markets and small businesses that are in a world of hurt. For more information, please visit: https://hercules-investments.com/hercules-public/index.html, Media Contact Hercules' portfolios are designed to achieve aggressive gains whether markets are rising or falling. The 10 Best and 10 Worst States in Which to Retire in 2021, Im an Advisor. The Securities and Exchange Commission today announced the filing of a civil injunctive action against James Arthur McDonald, Jr. and his SEC-registered investment adviser firm, Hercules Investments, LLC in connection with two fraudulent securities offerings. Contact our office today to discuss your case. Hercules applies quantitative research to design and actively manage portfolios for investors seeking maximum growth during up or down-market cycles. Hercules Investments won a 2020 Wealthies Award for being the top Alternative Asset Manager. We are able to provide uncorrelated growth, meaning our strategies do not depend on equity markets continuing to rise in order to accomplish gains. Registered in England and Wales. los angeles, oct. 10, 2019 /prnewswire/ -- award-winning derivatives investment management executive james a. mcdonald, jr. today announced that he has launched hercules investments llc, a los angeles-based registered investment advisor.hercules applies quantitative research to design and actively manage portfolios for investors seeking maximum Its not a doomsday picture, but markets are priced right now as if all economic engines are fully up and running. Whats your takeaway from GameStop, AMC, Blackberry, etc.? And weve seen, recent examples of how the concentrated energy of small investors can make headlines. In a portfolio with a beta of one, one would enjoy virtually 100% downside protection with an allocation of 15% to the Hercules fund. Fair question. Yeah. For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker. Vaccinating the public will not happen as quickly as most expect. Ryan Thomas Gosling (born November 12, 1980) is a Canadian actor. According to the complaint, McDonald also appears to have terminated his previous phone and email accounts and told one person that he planned to vanish.. Our employees and their family members enjoyed a wonderful time together this morning at PureTrack in Anaheim, CA! Covid-19 continues to spread rapidly and the vaccine rollout has been slower-than-expected, which is a worrisome combination for the economy and the stock market., The discussion will be streamed via Zoom at this link: https://us02web.zoom.us/webinar/register/WN_guvDkdmgQcy4-HcSuTnb1Q. No, Brent Kovars mother didnt have an artificial intelligence supercomputer in her basement, the SEC says. Strategy Voice Associates, LLC And so, the gains that weve seen have come based on an enthusiasm and optimism placed across the entire market. The Hercules investment team features investment professionals averaging over 20+ years of experience . Wealth Management is part of the Informa Connect Division of Informa PLC. James McDonald from Hercules Investments and James Camp, Eagle Asset Management director of strategic income and managing director of fixed income, discuss the impact of the $1.9 trillion coronavirus relief package to the stock and bond markets. or redistributed. And so, the breadth of success is extremely narrow. So, I got to root for Tom Brady because any 40-plus football player is one I admire. I think we will retest the previous lows of last March before buying comes back in. A conversation about economies, markets, wage inequality, Congress, crypto, and more. McDonald also allegedly raised over $3.5 million for securities trades through the Index Strategy Advisors Fund and misappropriated half of the funds for personal expenses. Previously, McDonald was of counsel to Gary, Williams, Parenti, Watson & Gary, P.L.LC. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. McDonald, who lived in the Los Angeles suburb of Arcadia, is believed to be in hiding, the statement said. And I think that that is much of whats happened in the macro as well. Lets start with your macro view. With this risk in the market, many individual investors have to count on either continued paid stimulus or continued paychecks and loans for small business relief. James McDonald from Hercules Investments and James Camp, Eagle Asset Management director of strategic income and managing director of fixed income, discuss the impact of the $1.9 trillion. JAMES A MCDONALD JR Agent Address 1718 HARRIMAN LN, REDONDO BEACH, CA, 90278 Directors / Officers JAMES A MCDONALD JR, agent Registry Page https://bizfileonline.sos.ca.gov/sear. Fox News Flash top headlines for September 22. So, common sense would say, what changed in one year for a 50% premium in a market that most people would agree has been propelled with no monetary policy and stimulus? Very few recessions and market collapses have recovered in the time period that we saw in 2020. The United States Securities and Exchange Commission subpoenaed McDonald to testify before it in November 2021, but - without advance notice - he failed to appear as required. Hercules Investments' James McDonald explains the different risk-related techniques advisors can use to keep clients comfortable with their portfolios. McDonald was CEO of Index Strategy Advisors from 2010 until 2019, when he founded Hercules, which offers market neutral portfolio management, while specializing in high-growth equity index options for clients. [Like this article? Greg Bartalos (@gregorianchance) is editor of New York City-based RIA Intel. LOS ANGELES, Oct. 10, 2019 /PRNewswire/ -- Award-winning derivatives investment management executive James A. McDonald, Jr. today announced that he has launched Hercules Investments LLC, a Los Angeles-based Registered Investment Advisor. The United States Securities and Exchange Commission subpoenaed McDonald to testify before it in November 2021, but without advance notice he failed to appear as required. Fox News Flash top headlines are here. With interest rates so low, what do you make of the TINA argument, which asserts there is no alternative to stocks? And I think that that will trigger selling of portfolios that have had extensive gains, particularly in the past six months. McDonald also allegedly raised over $3.5 million for securities trades through . Today, James not only discusses all things volatility but also explains different risk-related techniques professionals can use to keep clients comfortable with their portfolios in the market. This case was filed in Los Angeles County Superior Courts, Norwalk Courthouse located in Los Angeles, California. Absolutely. Furthermore, index options provide compelling risk/return profiles with substantially less risk and volatility than their stock option counterparts.". The Fund seeks to implement very short-term long and short positions in call and put options on the main US stock . The complaint also charges McDonald with violating Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, which prohibit certain transactions by investment advisers. Ainslie Simmonds Vision for Pershing X, a Startup Out to Replace Advisor Tech Stacks, Economist Jason Furman Explains How Inflation Snuck Up on Us and Whats Ahead in 2022, A Mountaineer CEO Talks Infinity Multiples, Thrill-Seeking, and How Advisors Need to Change, Modern Slavery Act Transparency Statement. He earned a bachelor's degree in economics from Harvard University. Powered and implemented by FactSet Digital Solutions. Below are excerpts from our Jan. 28 discussion, edited for length and clarity. The Exchange James McDonald's advice to the next generation Hercules Investments CEO and CIO James McDonald offers his advice to the next generation of Black Americans. And while recognizing that each investors needs are distinct, on balance what percentage of a portfolio should this comprise? There are hundreds of companies in the small cap space that dont have the cash to pay their debt. 2023 Informa USA, Inc., All rights reserved, In this episode, David Armstrong, editor-in-chief at. In fairness to James McDonald, television is a much more welcoming venue than an SEC hearing room or courthouse. James Arthur McDonald Jr., 50, was charged with a single fraud count and could face up to 20 years in prison if convicted, the U.S. attorney's office said in a statement. Quotes displayed in real-time or delayed by at least 15 minutes. The SEC filed a civil injunctive action against James Arthur McDonald, Jr. and Hercules Investments, LLC in relation to fraudulent securities offerings. The uncertainty around COVID-19 and risks of rising inflation were the impetus for launching the fund. Founded on May 26, 2005, GESCO provides private and corporate security services in various regions of the country including Baku, in accordance with the requirements of ISO 9001, ISO 14001, ISO 45001. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. This funds fees accelerate when its performance accelerates. This field is for validation purposes and should be left unchanged. All rights reserved. To be clear, you expect a risk event this year will take the Dow down to 15,000 but by year end it will finish higher than today? These filings are called "notice filings". In a parallel action, the United States Attorney's Office for the Central District of California announced criminal charges against McDonald. (Jun 1986 - Sep 2016) 101 Royal Park Dr. Oakland Park, FL 33309. James McDonald from Hercules Investments, and James Camp, Eagle Asset Management director of strategic income and managing director of fixed income, join 'The Exchange' to discuss the impact . Now he's wanted on fraud charges. McDonald will also be speaking at The Executives Club of Chicagos 2021 Annual Economic Outlook virtual event on January 14. McDonald, who graduated from Harvard University with an economics degree, expects the Dow will tumble more than 50% to 15,000, a prediction he has made several times since March 2020, before surging to new highs this year. The bull case would imply that were 50% stronger in terms of our earnings premium over our equity premium based on what we pay for earnings. GESCO is a security company operating in various fields and basing on the principle of physical protection. But stimulating growth is impossible if the economy isnt open. And when we look at unemployment now, we say its recovered, but the recovery hasnt brought sufficient growth. This field is for validation purposes and should be left unchanged. In 2005 he purchased the Houston Wolverines (the Texas Wolverines today), a semi-pro football team, and played for 13 years. McDonald graduated from Harvard University with a Bachelors degree in Economics. Our objective is to generate $10 billion for our clients in order for me to buy my football team. Fri, Feb 12. CHICAGO JUDGE DENIES BAIL FOR ILLINOIS WOMAN WHO ALLEGEDLY PUSHED 3-YEAR-OLD NEPHEW INTO LAKE MICHIGAN. WealthManagement.com Staff | Nov 05, 2020. Actually, he didnt just assume it: He bet his clients money rather heavily on it, and lost them upwards of $40 million doing so. And debt has spiraled over 50% higher to GDP than where we were last year this time. 2023 FOX News Network, LLC. Unfortunately, according to the Justice Department and SEC, he didnt tell those new investors about all the money he lost on the election, nor precisely what he was going to do with it, as dropping $174K at a Porsche dealership and paying $110K to his landlord are not the same thing as launching a mutual fund. But I think that the market will rebound and potentially finish the year slightly higher. In late 2020, McDonald lost between $30 million and $40 million of Hercules client money after adopting "a risky short position" based on his wrong prediction that the stock market would drop.