Secretary of State should take action on business dealings of Board of Governors member

It's been almost two weeks since and exclusive Policy Watch investigation by reporter Joe Killian revealed that former North Carolina state senator and current University of North Carolina Board of Governors member Thom Goolsby has been engaged in business dealings that demand an examination by officials in the Securities Division of the North Carolina Secretary of State’s office.

In case you missed it, here are the relevant facts:

Goolsby and a partner named James Upham ran an investment adviser business back in the early part of the decade called Empowered Investor, Inc.

Former clients of the company filed a lawsuit in 2013 in which they claimed to have lost tens of thousands of dollars in risky investments to which they said they never consented.

Eventually, the state of North Carolina, through the Secretary of State’s Securities Division, dissolved the company and revoked Goolsby’s and Upham’s investment adviser registrations.

In a consent order to which Goolsby agreed, he and Upham were barred from seeking registration as investment advisers, investment adviser representatives, dealers or salesmen for 10 years.

The two men were also ordered to “desist from engaging in any conduct or practice involving any aspect of the securities or financial services business and from transacting any business as an investment adviser, investment adviser representative, dealer, or salesman in this State.”

Less than a year after the consent order was memorialized in April of 2014, however, Goolsby registered a new firm called Charting Wealth, LLC in Las Vegas, Nevada.

Today and for some time, Goolsby has been promoting a “Charting Wealth” website and providing daily market analysis via a YouTube channel. He also sells a self-published book, “Charting Your Way to Wealth: Make Millions in the Market by Learning to Recognize and Follow Stock Trends.” According to the company’s materials, it teaches investors how financial markets work and ways to recognize and exploit trends.

Perhaps most notably, however, Goolsby also solicits “donations” via the crowd-funding site Patreon, through which he offers paying “patrons” the opportunity to receive “live Monthly Q&A,” “personal monthly training calls” and, for those who contribute at the highest level, a “five-day intensive training.”

It’s unclear whether any of his current patrons reside in North Carolina and whether that would be relevant to the consent order.

While Goolsby offers disclaimers on his website which aver that he offers “NO advice and make[s] NO claims to expertise of any kind,” two securities law experts who have examined the business’ offerings at Policy Watch’s request say Goolsby could be violating the spirit – and potentially the letter – of the April 2014 order.

“It certainly has the aroma that he’s gone beyond the consent decree in terms of what he’s offering to people who donate to this,” said Tom Hazen, a UNC-Chapel Hill law professor with expertise in corporate, securities and commodities law.

James Cox, a professor of law at Duke University put it this way:

The minute he starts looking at somebody and saying something specific to an investor’s portfolio, then he’s going to run afoul of this order. I think the Q&A [i.e. the sessions he offers to high dollar patrons] would be very dangerous for him.”

Given this backdrop, it’s seems clear that officials in the Secretary of State’s office should investigate the matter carefully to determine whether Goolsby has been acting in violation of the 2014 consent order and its ten-year ban on “engaging in any conduct or practice involving any aspect of the securities or financial services business.”

A spokesperson for the Secretary told Killian that the Securities Division is aware of Goolsby’s activities, but that it was office policy not to confirm or deny whether there is an investigation underway. The office also refused to release the original complaints that gave rise to the 2014 order, claiming that they related to a criminal investigation.

These are both extremely poor policies. Such releases of information occur all of the time in law enforcement investigations and the public ought to have the right to know whether their government is taking action on such a matter and, if action is underway, be apprised of some kind of time frame for its conclusion.

While transparency concerns might be partially alleviated if some kind of definitive action is forthcoming from the Secretary of State’s office in the very near future, the blackout still sets a poor precedent. It would be an especially absurd situation if the matter simply lingered on for an extended period with no public announcement of a resolution.

All of this, of course, comes at a particularly contentious and challenging period for the University of North Carolina and its leadership, which has seen repeated turnovers and controversies.

At a time in which the Board of Governors will soon be making several momentous and potentially controversial personnel decisions – including the selection of a new system president and multiple chancellors – the last thing North Carolina needs is more uncertainty and/or the air of scandal hanging over the process.

The bottom line: The Secretary of State needs to take swift and definitive public action on the Goolsby matter, one way or the other.