Raleigh, N.C. — State Sen. Thom Goolsby, R-New Hanover, and his investment firm, Empowered Investor, have agreed not to offer investment advice under the terms of a agreement reached with the Secretary of State's Office.
The agreement applies to Goolsby, his company, and partner James Daryl Upham.
Goolsby, who did not seek re-election this year, said that he was aware of the agreement but declined to speak about it, referring questions to his lawyer, Melissa Gott. Gott was not immediately available Thursday morning. She later emailed, "This is a business that was ultimately not a success. Thom Goolsby dedicated a great deal of energy and his own money in this venture. He never received even one paycheck.
"However, he worked hard to see to it that all the debts of the corporation were paid and investors compensated. That's just the kind of person he is. Thom Goolsby was never a registered investment advisor. For many months he co-hosted a radio show where he talked about trading in the stock market."
It's worth noting that contrary to Gott's statement that Goolsby was never a registered adviser, the consent order signed by Goolsby says that he by virtue of the fact that he was half- owner of a firm that engaged in dispensing investment advice.
Empowered Investor marketed a strategy Goolsby and Upham called the "10-20-50 Plan."
According to a news release, this "plan supposedly invested clients’ money in a way where investments losing more than 10 percent would be sold to prevent further loss, investments earning more than 20 percent would be sold to capture the gains and no more than 50 percent of the clients’ accounts would be invested in securities at any one time."
However, investigators with the Secretary of State's Office say the plan was often not followed, "resulting in greater client losses than if failing investments had been sold once they suffered a 10 percent loss. Investigators also found clients were not told their money was being invested in a way that was different than being advertised."
Goolsby's firm has been sued by investors, who cited complaints related to the issues in the consent order. Mott said that lawsuit was "quickly dismissed. The parties later amicably resolved all matters."
Under the terms of the consent order, the Secretary of State's Office has revoked the investment adviser registrations of the company, Goolsby and Upham. The company and the two men also agreed to wait 10 years before seeking to register as investment advisers again.
"Empowered Investor Incorporated, Upham and Goolsby were also ordered to cease and desist from engaging in any practice involving securities or financial services business in North Carolina," according to the Secretary of State's Office.