There is a great disparity in the law with regards to gift giving to college athletes. Sports agents are highly scrutinized and regulated when it comes to contacting college athletes with financial intentions, while financial advisors are provided much more leniency and are not held to the same standards as sports agents. In most states, it illegal for a sports agent to provide a college athlete with an item or gift of value, or to approach them at all without registering with a regulator. As it currently stands, in many places these laws do not apply to financial advisors. The result- many financial advisors are exploiting unknowing college athletes and fraudulently misusing their money, and in some cases, stealing it. They are not holding up their duties as fiduciaries to college athletes, and are instead using them as a means to profit. These deceitful advisors usually target college athletes that have high prospects of becoming professional, and in turn, have high earning potential.
An example of this mistreatment can be seen in the case of former NFL linebacker Steve Octavien, and his financial advisor, Mary Wong. Before playing professionally with the Dallas Cowboys for six seasons, Steve Octavien played football at the University of Nebraska from 2005 to 2007. Ms. Wong frequently went to events where she knew many football players would be attending. She built relationships with many players, and bought them gifts such as clothes, private jet flights, and tire rims. Octavien explains, “When it came to the agents, that stuff was a big no-no to me,” he says. Ms. Wong was different because “she was a financial advisor” who “had nothing to advise,” since he wasn’t earning any money from football at the time (Steinberg). This exemplifies not only the discrepancy in judgment by the law between sports agents and financial advisors, but also the difference in perception from players receiving the gifts from these entities as well. Ultimately, Steve Octavien invested $80,000 with Ms. Wong after entering the National Football League, and has not gotten any of his investment back. Ms. Wong allegedly was running a Ponzi scheme, and used the $80,000 to pay off credit card debt, and compensate other individuals who let her manage their investments. Mary Wong was arrested for multiple counts of securities fraud in 2009 and sentenced to 63 months in prison (Steinberg).
The case of Mary Wong is not a singular occurrence. Many fraudulent financial advisors continue to swindle college athletes who are ignorant to the potential risks involved. Regulators are currently working on creating more homogeneous laws that govern both sports agents and financial advisors with regards to college athlete gift giving. Currently, the predominant legislation regarding gift giving is called the Uniform Athlete Agents Act (UAAA) of 2000. The law makes it illegal for agents to give gifts to athletes, and demands that they register with regulators prior to meeting with athletes. Agents who fail to follow these laws may be prosecuted. Unfortunately, for the most part the act exempts financial advisors from the same regulations (Steinberg). The committees working on reforming sports agent legislation are attempting to broaden the language to encompass a wider group of financial entities to reduce the likelihood of unlawful actions. Jeff Hawkins, Senior Associate Athletic Director at the University of Oregon describes this broader group of individuals as “anyone who seeks to profit off a student-athlete’s abilities or reputation” (Steinberg). Creating more standardized regulation for financial entities involved with college athletes will greatly reduce the number of athletes who get taken advantage of by these corrupt individuals. Getting this legislation passed as quickly as possible is paramount to protect college athletes that are being misguided across the nation, and to hold financial advisors to their fiduciary duties.
Steinberg, Julie. “Colleges Push to Keep Financial Advisers Away From Athletes.” Wall Street Journal 6 Nov. 2014. Dow Jones and Company’s. Web. <http://online.wsj.com/articles/colleges-push-to-keep-financial-advisers-away-from-athletes-1415331002?tesla=y>.