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The fiduciary rule in the US, which was introduced by the Department of Labor, mirrors Canadian securities regulators’ ongoing efforts to create a best-interest standard protecting investors. While clients’ interests must be protected, one high-profile case could show a possible caveat to that principle.
Earlier this month, the Chicago Tribune reported that Johnny Depp has sued the Management Group for US$25 million that he says they cost him due to mismanagement, according to Financial Advisor IQ. His financial manager countersued, alleging that the actor’s financial difficulties were caused by his own overspending.
Writing for the Davis Clipper in Utah, Bryan Gray cited analysis from the New York Times indicating that Depp had made some US$650 million over the past three decades. Despite this, Depp faces foreclosure on numerous assets and owes more than US$5 million in interest on his taxes.
Gray also wrote that Depp has spent up to US$2 million a month on lavish acquisitions such as a chain of islands in the Bahamas and an entire French town. When Hunter S. Thompson, a friend of Depp’s, died in 2005, he reportedly spent US$3 million on a funeral service, which included blasting the journalist’s ashes out of a cannon.
According to Gray, Depp admitted in his lawsuit that he didn’t monitor his finances or his advisors’ investments even though he should have. The Tribune reported that the Management Group has also accused Depp of owing the firm US$4.2 million for a loan and a further US$560,000 in fees.
“If there is no evidence that the financial advisors lied to him or committed purposeful fraud, then Depp is the problem, not the victim,” Gray said in his piece on the Clipper. “It was his right to spend foolishly and toss his ‘mad money’ into projects that interested him. But when his finances turned sour, he should have looked in the mirror, [instead of hiring] a lawyer.”
US President Donald Trump, who is trying to create a better environment for businesses, has ordered a review of the fiduciary rule.
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