On paper, this guy was exactly who you’d want managing money. SEC-registered, FINRA-registered, practicing since the Clinton administration. And that warm smile!
That’s the problem with people with status, their credibility is assumed. Recent college grads are more scrutinized with background checks than those being considered for c-suite positions.
The Camarda case broke earlier this month and it’s being covered as an investment fraud story. But if you’re doing deals, bringing on a partner, or putting capital behind a management team, read it differently. It’s a due diligence story.
People will spend a boatload of money looking at the books and not pay attention to Quality of People(TM). Think of it as the human capital version of Quality of Earnings. QofE tells you if the numbers are real. QofP tells you if the people behind the numbers are who they say they are.
Credentials confirm someone existed. They don’t tell you how that person actually operates, and $138 million is a lot to learn that lesson.
Here is the question . . . would a due diligence on Camarda have been useful? He was just arrested this year, but the past four years he has had regulatory issues, including being suspended as a Certified Financial Planner in August 2022. And he continued taking client money for two more years!
A basic FINRA BrokerCheck pull in 2022 would have shown the SEC charge. Anyone checking in 2024 would have seen an avalanche of complaints and arbitration losses. Soon after his home and office building were foreclosed on, and he had an unpaid $70k bill with AMEX.
“Trust but verify” isn’t just a cold war strategy. It’s a due diligence philosophy.