After this week’s episode of HBO’s Ballers, don’t be surprised if several securities regulators make cameo appearances over the next couple of weeks. (Warning, spoilers ahead.)
After financial advisor Joe Krutel (Rob Corddry) negotiated the price down to $150,000 for a set of compromising photos taken of client Vernon Littelfield (Donovan W. Carter), he, Spencer Strassmore (Dwayne “The Rock” Johnson) and agent Jason Antolotti (Troy Garity) have a sit-down with their client to discuss the next steps.
But despite all their hard work, Littelfield still isn’t happy paying to keep the photos out of the press. To smooth over the situation, Strassmore offers to pay the blackmail; a situation real-life financial advisor Tom Reynolds calls “totally unrealistic” and a possible violation of Financial Industry Regulatory Authority’s rules.
While it would not be uncommon to discuss the ramifications (both financial and otherwise) with a client, it was pretty unrealistic to see a financial advisor come out of pocket with such a payment, adds Justin Bass, managing director of True Capital Management.
“That is a recipe for a short career in financial services,” says Jordan Waxman, managing director and partner of HSW Advisors at HighTower. “There are regulations governing gifts, loans, profit-sharing and split interests with clients.”
And while Strassmore’s offer may have temporarily resolved the relationship issues between the two and built a sense of loyalty, the danger is in creating an attitude of entitlement and expectation, says Erik Averill, an advisor with Athlete Wealth Management Group.
“While the client might feel like he 'got away with something' this one time, I question whether the client would actually respect the decision on the advisor's part or, more likely, see the advisor as a sucker that can be taken advantage of in future situations,” Bass says.
Waxman adds that for a client who is aware of the conflict of interest and how it is against the rules, he or she may conclude that the advisor is willing to break the rules in order to get business. “No one wants that reputation or risk,” he says.
