This was obviously a ponzi-esque scam. That's just old fashioned financial crime. There was something that umped out at my though, now that we're in a time where we've thought about long tail or black swan risk quite a lot.

"Secure Investment said it offered something safer: It made trading decisions for investors and guaranteed their principal."

Ultimately the long tail perverse incentive (I don't know if there's a name for it, but it's the same perverse incentive that performance bonuses create) is a tricky one and I think it permeates a lot of things. Say, these guys came out with a more credible claim. They guarantee 80% of your principle and target 10%-20% returns. There probably are trading strategies that produce nice results in the -20% - 20% range with a long tail risk of 100% loss.

Over twenty years, they might average over 10% returns with nice fees or bonuses (regardless of how this is set up) with an occasional cost to honoring the guarantee. One year out of twenty, they wipe out all investors and the game is up. The company takes home whatever it's made up until that point and investors lose their entire principle.

This kind of risk is difficult for us to understand. Regulation chokes on it. Investors choke on it. A 43 year old fund manager looking at his competitors' successful 17 year run is very likely to choke on it.