ADISA Submits Letter-to-the-Editor of Wall Street Journal

May 16, 2018

ADISA has submitted the following letter-to-the-editor of the Wall Street Journal in response to the publication's May 7th article, "A Private-Market Deal Gone Bad: Sketchy Brokers, Bilked Seniors and a Cosmetologist."
Read the letter below:
Jean Eaglesham and Coulter Jones’ May 7th article, “A Private-Market Deal Gone Bad: Sketchy Brokers, Bilked Seniors and a Cosmetologist” does an admirable job of chronicling the alleged Woodbridge Ponzi scheme.
Unfortunately, rather than simply report on the particulars of that lamentable incident and the interesting peculiarities surrounding it, the article employs a remarkably broad brush to paint private placement securities offerings and the financial advisers that recommend them as “sketchy.” Indeed, the article goes so far as to present a presumably scientific analysis to determine that such advisers are far more likely to be scofflaws than those that do not offer such offerings to their clients. Of course, this analysis is anything but scientific – it is a shallow and simplistic vehicle used to reach a predetermined conclusion.
The fact of the matter is that private placement securities offer high net worth investors valuable opportunities to participate in alternative investments that can provide important diversification and potentially significantly higher yields to their portfolios. Of course, such investments may sometimes involve greater risk than government bonds or index funds – which is why they are statutorily restricted to accredited investors.
Additionally, of the more than US$70 trillion in global AUM, upwards of 14 percent is in alternatives, with a significant portion of that in private placements. There are thousands of advisers throughout the country successfully employing alternative investments to help their wealthier clients reach their investing goals. In doing so, they are simply providing their clients with investment options in alternative asset classes that have been embraced by the most sophisticated institutional investors for many decades. Furthermore, we cannot imagine a vibrant economy without the essential funds for small business, new projects, jobs, and growth that private placements provide.
Of course, there are bad actors in the securities world, just as there are in every industry. To use a particularly galling example to disregard an entire class of investment offerings and those who recommend them is unfortunate, foolish and dangerous – particularly coming from the nation’s most respected financial newspaper.
Investors should always be cautious, both in selecting their investments and those who assist them in managing their wealth. There are countless thoughtful, intelligent and licensed wealth advisers available to the investing public – a growing number of whom appropriately recommend well-structured and well-managed private placement investments.
John Harrison
Executive Director
ADISA (Alternative & Direct Investment Securities Association)