Everything is Bigger in Texas… Except the Affordable Care Act

By: Morgan Schroeder, Spring 2019 HeLP Legal Services Clinic Intern

On March 23, 2010, the Affordable Care Act (ACA) became law. The ACA (or, as it’s commonly referred to, Obamacare) expanded Medicaid in hopes of achieving “near-universal” health insurance coverage, and introduced several provisions that would help more Americans acquire insurance. The ACA had several provisions that were very popular with the public, including prohibiting insurance companies from discriminating against individuals based on preexisting conditions and health status, and some that were unpopular, including the individual mandate, which would require all individuals to have minimum essential coverage or else they would be required to pay a penalty.

Since President Trump took office, his administration has sought to repeal and replace many of the ACA’s provisions. The House Republicans proposed the American Health Care Act (AHCA), which would retain the protections for individuals with preexisting conditions, but would replace many of the ACA’s other statutory provisions. The House passed the AHCA, but it did not pass in the Senate. The Senate alternatively proposed the Better Care Reconciliation Act (BCRA), which would have allowed states to apply for waivers to opt out of many ACA provisions, including the provisions on preexisting conditions. However, the BCRA did not pass either. Although neither of these bills passed, several ACA provisions have still been weakened by the new administration. The Tax Cuts and Jobs Act (TCJA), which became law in December of 2017, repealed the tax penalty associated with the individual mandate and became effective at the beginning of 2019. The individual mandate itself remains in place, but there is no longer a tax penalty assessed against those who choose not to purchase an insurance plan. Overall, the ACA remained in effect, until…

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Losing the Game: Video Game Business Charged with Fraud

By Caitlyn Scofield, Spring 2019 IAC Student intern

As millennials come to the age where they are investing, they often follow the old mantra stick to what you know and often what we know is the power of social media and mobile gaming. This relatively new and burgeoning industry has become a gold mine for investors and entrepreneurs due to microtransactions and ad revenue.  This force driven by monetary transactions ranging from .99 cents to hundreds of dollars has a business model which focuses on what are referred to as “whales” in the industry. These are individuals who instead of making periodic small in-game purchases spend thousands of dollars on one game.  Many innovative and driven individuals have made significant profits following this trend. Yet not all entrepreneurs want to put in the effort to make their business successful and instead take advantage of hopeful investors. Continue reading

Wednesday Word: the Howey Test

By: Caitlyn Scofield , Spring 2019 IAC Student Intern

Have you ever looked at your bank account and wondered where your money went? As an investor, you ask yourself the same question “what am I putting my money into”? There are many investment opportunities out there. The government has put into place certain regulations for investments. These ensure that certain information about specific investments are provided honestly and accurately to the investor. This is done through the Securities act of 1933 and the Securities Exchange act of 1934.  Yet not all investments are covered under these acts, only those that are determined to be securities are regulated in this way.

“How do I know if my investment is a security” you might ask?  In 1946, the Supreme Court answered that question by developing “the Howey Test”. Continue reading

Investor Ed Crossword Puzzles: Prohibited Conduct

All forms of investing carry some degree of risk. Brokers must be diligent in protecting their customers from additional, unnecessary risk. Brokers must never guarantee market or product performance. Unless a customer has given discretionary authority to trade on a consumer’s account, a broker must obtain authorization  or permission before conducting transactions. It is important to always read all documents before signing so you know whether your permission is required before a trade or if a broker can make a trade without express permission. Brokers should never recommend unsuitable securities, nor should they ever misrepresent a material fact about the product.

FINRA’s Best Execution and Interposition Rule 5310 requires a broker to use reasonable diligence in ensuring a customer’s transaction is executed at the best possible price available. A Broker should never charge excessive commissions or mark-ups on the purchase or sale of a security.

Furthermore, a broker engages in prohibited conduct if he or she engages in the switching of one mutual fund for another without a legitimate purpose. A broker should not remove a customer’s funds or securities from the customer’s account without the customer’s prior authorization. FINRA also prohibits brokers from trading ahead. FINRA Rule 5320 states a broker should never trade ahead by placing an order for the firm’s account before entering a customer’s order.

Test out your knowledge with this crossword puzzle: Continue reading

Wednesday’s Word: Alternative Dispute Resolution

By: Brook Ptacek, Spring 2019 IAC Student Intern

Alternative dispute resolution or “ADR” is where parties agree, by contractual agreement or otherwise, to resolve their dispute outside of the court system.  It is another forum to get your matter quickly and efficiently resolved…and most importantly, a way to save extra money spent on attorney fees and court costs to reach a resolution.

There are two main forms of ADR: arbitration and mediation.  In the Investor Advocacy Clinic, you will hear us refer to arbitration a lot.  The main difference between the two is that the rulings in arbitration are binding, while mediation voluntary. Click here for FINRA’s break-down comparison. Continue reading

Know When to Run… Don’t Be A Gambler

By G. Kevin Mathis, Investor Advocacy Intern

On February 7, 2019, the Security and Exchange Commission (SEC) charged Robert Alexander (Alexander) with fraudulently raising approximately $9 million.  The SEC complaint alleges that Alexander sold investments on Kizzang LLC defrauding more than 50 individuals.  Alexander allegedly claimed that investment funds would start up his online sweepstakes and fantasy sports entertainment services company.  Instead, Alexander allegedly used the investors’ funds for himself. Continue reading

Accounting for Your Lifestyle in “Retirement”

By Caleb L. Swiney, Spring 2019 IAC Student Intern

This Wednesday’s word may seem simple, but there really is no universal definition for “retirement.” The choices that you make throughout your life, as both an investor and as an individual, will have a profound impact on how secure you are in retirement. Recently, FINRA published an article titled, “Kids Will Turn Your Hair Gray,” noting that 66% of people with dependent children are worried about running out of money in retirements, but that only 54% of people without dependent are worried about running out of money in retirement.

On its face, this article would seem to be about managing retirement income in relation to childcare expenses. What this article discusses, however, are general retirement guidelines that will help any investor feel secure in retirement. Continue reading