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FirstCommand fined by National Assn. of Securities Dealers

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skidkid

skidkid

CAS Czar
pilot
Super Moderator
Contributor
Not surprised, glad I dodged that bullet thanks to some good gouge in Pcola. They are a very shady organization and not looking out for you. I would reccomend USAA investment services.
 
VarmintShooter

VarmintShooter

Bottom of the barrel
pilot
Anybody know if these were the guys hanging around NTC Great Lakes in the 1994-5 timeframe? Those guys were preying on junior enlisted guys with a similar 'contractual' plan.
 
S

skyhigh81

Registered User
Just for the hell of it, can anyone really explain the difference between First Command and other Investors to me because the article explains what First Command has done wrong or how they conducted business, but what is the differences between other companies like First Command? I ask this because I know there are senior officers out there that swear that First Command is great if you can't invest a lot of money.
 
Dawgfan

Dawgfan

Pending
pilot
Lets say you gave 100 bucks to First Command. In the first year, they take 50 dollars as their fee. That means that your fifty dollars has to go up 100 percent for you to get back to even.

Using the rule of 72, where 72 divided by the interest rate is the amount of time it takes to double your money, and you could get 10% return on investment, it would take 7 years to get back to even. (http://invest-faq.com/articles/analy-rule-72.html)

If you invested with them for thirty years this might not be that big of a deal, but it's an awful big hole to be in. A very sketchy, non-standard investment technique. Plus they had people calling brand new 01's going "This is Mr. So and So. I'm a retired Colonel, and I think you and I should meet blah blah blah.
 
C

cindy

Registered User
skyhigh81 said:
News media will tell you what they want to tell you though.
Click to expand...

You betcha. Martha Stewart Ominimedia is example. If you listen to news media it would be a stock you would stay away from. Well I bought at 7.89 couple months ago, yesterday it closed at $30. and change.

I am convinced that those media folks hold short positions in stocks (companies) they deride (short meaning the lower the stocks sink, the more money they make).
 
smittyrunr

smittyrunr

Well-Known Member
pilot
Contributor
Dawgfan said:
Lets say you gave 100 bucks to First Command. In the first year, they take 50 dollars as their fee. That means that your fifty dollars has to go up 100 percent for you to get back to even.

Using the rule of 72, where 72 divided by the interest rate is the amount of time it takes to double your money, and you could get 10% return on investment, it would take 7 years to get back to even. (http://invest-faq.com/articles/analy-rule-72.html)

If you invested with them for thirty years this might not be that big of a deal, but it's an awful big hole to be in. A very sketchy, non-standard investment technique. Plus they had people calling brand new 01's going "This is Mr. So and So. I'm a retired Colonel, and I think you and I should meet blah blah blah.
Click to expand...


True, they call these contractural plans, and the initial plan they set up is for 15 years. So you'd get back the money (as far as i've figure it out, over the long haul you'd be paying any other financial institution just as much, it's just not all up front.) Wait a minute, though... So I started an investment plan with them as an Ensign, paying rent and utilities for the first time, paying off my career started loan, etc. I could pretty much just put enough away to fund a Roth and about $50 more a month. So they take half of that as their commission. January comes around, and then May, after that first year I get pay raises and can put more away, they aren't taking a larger chunk at that point. Make any sense? Maybe not since I'm an engineer and have never taken any kind of economics class, but since I have neither the knowledge nor the time and desire to figure out exactly how I could make a few pennies more here and there, this works for me.

What the NASD is saying is that First Command did not tell people how much they were paying FC up front and didn't make clear the penalties for ending your plan early. In my own experience they were extremely clear about this- maybe there are some instances where people were misled, but not from what I've seen.

Update to the story: A couple days ago I got a letter from First Command saying that due to the congressional and media attention, they will no longer be selling new contractural plans.
 
kferg

kferg

VT-35 SNA
First Command

I think a big reason they are afriad is the temperature of the market. These contractual funds don't give you any flexability and tie your money to one fund for 15 years or more. If for some reason you can't complete the contract you really get nailed. If you stick through the contract the relative sales percentage taken is less than what it would be if you pay along the way (or so it was explained to me).

I've got a percentage of my investments in first command, and don't plan on deviating from the rules of the contract. Does anyone with more experience really know if we are getting a little shafted here? There seem to be a bunch of very wealthy senior officers who invested this way...
 
airwinger

airwinger

Member
pilot
heck there are soo many cheaper alternatives out there, personally I use sharebuilder.com for short term and a USAA ROTH IRA and TSP for my longer term goals.

The Sharebuilder monthly investment plan is $4 a month on a $300 a month that's 1.3% slightly less than the 50% initial fee. Plus if I need the money back, there are no penalties involved.
My philiosophy is I'm an adult and don't need big brother to provide me with "discplined investing"
 
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saltpeter

Registered User
Is this the company that used to take you to lunch at the golf course off base and buy you the keylime pie. Good lunch, bad sales speech, "I was a Navy man, now give me your wallet to hold."
 
airwinger

airwinger

Member
pilot
Just to add, I don't mind them charging 50% fees, just as I don't mind credit cards at 19%, it's simple don't use either. What I do detest is what saltpeter and Dawgfan said, the "I was a colonel/sgt major, you should listen to me" After OCS/Boot camp one tends to be very open to such suggestions.
 
J

johndd321

Registered User
Here is a list of many articles I have compiled over the last year about the company.

Two of my favorite quotes from the SEC article.

"Historically, approximately 57% of First Command’s customers failed to achieve the required 180 payments and, consequently, many of them paid a substantially higher sales charge than is customary for load equity mutual fund investments."

"The SEC, in its Order, finds that since at least January 1999, First Command offered and sold systematic plans by making misleading comparisons between the systematic plan and other mutual-fund investments. For example, sales scripts utilized by the firm claimed no-load mutual funds “frequently have some of the highest long-term costs” and are primarily for “speculative” investors. In reality, the average long-term costs of owning no-load funds are substantially lower than the costs of owning load funds, and many long-term investors invest in no-load funds."



Article about how the House of Reps voted to ban the sell of contractual mutual funds First Command Sells:
http://money.iwon.com/jsp/nw/nwdt_r...41005&date=20041005&alias=/alias/money/cm/nw/

Article leading up to the House of Reps vote:
http://www.timesargus.com/apps/pbcs.dll/article?AID=/20040910/NEWS/409100343/1002/NEWS01

Voting ballet:
http://clerk.house.gov/evs/2004/roll496.xml

Article about the SEC probing First command
http://money.cnn.com/2004/07/22/funds/military_investments/

The two new York Times Articles
http://query.nytimes.com/gst/abstract.html?res=F30C1EFD3B5C0C718CDDA90994DC404482

http://www.nytimes.com/2004/09/02/b...=843e0b95ad51af59&ei=5090&partner=rssuserland

SEC article discussing First command’s misleading practices and 12 million fine
http://www.sec.gov/news/press/2004-170.htm

NASD article discussing the 12 million fine and misleading practices
http://www.nasd.com/stellent/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_012786&ssSourceNodeId=553


Two Fund Alarm articles about First Command
http://www.fundalarm.com/arc0703.htm

http://www.fundalarm.com/arc0604.htm


New York Times 2002 article and Kiplinger September 2003 article about the company
http://www.angelfire.com/journal2/johndd321/FC_articles1.htm


You can file a complaint about companies like first command with the national consumer protection law firm of Lieff Cabraser Heimann & Bernstein, LLP
http://www.lieffcabraser.com/gi-insurance.htm
 
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