Investigation opened after Usain Bolt spots ‘discrepancies’ in investments

How does this impact you? I’ll explain below, however, this is what the BBC reported.

“A company which looks after Usain Bolt’s investments is under investigation after reports he may have lost millions of dollars to fraud.

Jamaica’s Financial Services Commission (FSC) has placed the firm, Stocks and Securities Limited (SSL), in “enhanced oversight” following the allegations.

The 36-year-old retired sprinter had investments with SSL for over a decade.

Bolt’s manager Nugent Walker told the Jamaica Gleaner the eight-time Olympic champion had noticed “discrepancies”.

It appears Usain Bolt noticed discrepancies. The question is therefore, why was it left for Usain Bolt to spot the discrepancies?  Also, what is the definition of discrepancies?  In this case, it appears, the discrepancies are millions of dollars.

It seems poor due diligence on behalf of Bolt to be aware that millions had disappeared.

What should Bolt have done?

If Usain Bolt has delegated his investments to a firm to manage his money, he should also have employed an independent firm to audit their behaviour.  If he employed an impartial firm, they would hopefully have noticed the discrepancies some time ago. If you delegate your money to a firm that has discretionary powers, manages your money and reports on your money, there is no link in the chain to check everything is OK.

It means from time to time, whoever looks after your money, you need impartial oversight.  To see things, you as an investor may not see.

What about the word discrepancy?

Losing millions seems like such a big number not to spot was missing.  But what if the discrepancies are not millions?

What if you were overcharged by 1% each year on your investments, is that a discrepancy?  How much needs to be missing to call it a discrepancy?

In a perfect world, investors would be able to carry out due diligence themselves on those who manage their money.  It would mean they could ask all the pertinent questions to check the success or failure of the people they employ.  They would also understand what they are being charged and they would have clarity over what the managers are doing for them.

We don’t live in a perfect world.  Investors in general would struggle to understand whether their wealth managers or similar are successful or not.  Many still have no clear idea about what they are being charged. Many also cannot articulate what they are paying wealth managers to do for them.  If you are in any doubt, write down the answers to these questions!

I understand the point that we all want to trust implicitly those we delegate to manage our wealth. Yet sometimes things go wrong. They have gone wrong for Usain Bolt.  They could go wrong for you.

It, therefore, seems prudent behaviour to audit your investments. At worst you prevent problems like Usain Bolt, and at best, you can take on board a number of questions to ask your managers over time.