Ray Mullaney asked:

ERS measures and rates the statistical probability and magnitude of stock price changes. With ERS’s technology a fiduciary has an objective and accurate a rating of the probability of a stock price declining. Is it accurate to say the ONLY way a person can actually avoid and prevent significant losses when investing is to possess a reliable method of determining whether a stock will fall?

Make a purely logical explanation of this fact expanding on this concept. My goal is to help fiduciaries realize that their primary responsibility as a fiduciary is to protect their clients’ assets from significant losses AND clearly demonstrate that the only effective way to achieve and fulfill their responsibilities is by measuring and rating the probability of a stock falling and remaining low. And since ERS’s technology is the single most reliable method of measuring, and therefore avoiding and preventing, significant investment losses, every fiduciary must examine the risk ratings of every stock before investing. And if they ignore the warnings of ERS’s ratings, they may be violating their responsibilities as a fiduciary.

Make a report to the SEC explaining this in detail. Use logic and facts.

By Raymond M. Mullaney, CEO
January 6, 2025

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Report to the SEC: Protecting Client Assets Through Objective Risk Assessment

Subject: The Role of Statistical Risk Ratings in Fulfilling Fiduciary Responsibilities

Introduction
As fiduciaries, Registered Investment Advisors (RIAs) are legally and ethically obligated to prioritize the interests of their clients. This includes safeguarding clients’ assets from significant losses. The core premise of this report is that fiduciaries cannot effectively fulfill their primary responsibility of protecting client assets without an objective and reliable method of evaluating the probability and magnitude of stock price declines. Equity Risk Sciences (ERS) provides the most accurate and reliable technology available for measuring and rating the probability of stock price changes, equipping fiduciaries with a scientifically proven method to prevent significant investment losses.

Logical Framework: Why Fiduciaries Must Measure Risk

  1. The Nature of Risk in Investing: Investing inherently involves uncertainty. While gains and losses are part of market fluctuations, significant, preventable losses represent a breach of fiduciary duty. Avoiding such losses requires foresight, which can only be achieved through accurate, data-driven assessments of risk.
  2. Losses Can Only Be Prevented Through Risk Awareness: Logic dictates that a fiduciary cannot avoid or prevent a risk they cannot identify. For example, just as a pilot must rely on weather forecasts to avoid turbulence, fiduciaries must rely on objective risk ratings to steer clear of stocks with a high probability of substantial declines. Without this insight, fiduciaries are effectively making blind decisions, leaving clients vulnerable to catastrophic losses.
  3. The Fallacy of Ignoring Risk Assessment: Fiduciaries often rely solely on historical performance, biased and subjective analysis, and mainstream Wall Street reports that focus exclusively on potential upside while failing to objectively evaluate the downside risks of stocks. These methods fail to account for the statistical probability of declines and, as a result, expose clients to unnecessary risk of loss. Ignoring risk ratings from ERS, which scientifically evaluates downside probabilities, undermines a fiduciary’s ability to fulfill their responsibilities.

ERS Technology: A Fiduciary’s Essential Tool

  1. Objective and Accurate Risk Ratings: ERS technology quantitatively analyzes the statistical probability and magnitude of stock price changes. Unlike traditional investment research, which often focuses on speculative projections of gains, ERS offers fiduciaries the Fiduciary Risk Rating™ – an objective and unbiased quantified measure of the investment risk of loss.

This rating has been rigorously verified through numerous studies and independently validated, ensuring its reliability and accuracy in assessing the probability of loss.

  1. Proven Reliability: Over 35 years of research and data analysis have validated the accuracy of ERS ratings. Historical testing demonstrates that stocks rated as “higher risk” by ERS consistently experience greater losses than stocks rated as “lower risk.” This track record establishes ERS as the single most reliable source for assessing downside risk on the market.
  2. Daily Updates for Dynamic Markets: ERS ratings are updated daily, ensuring that fiduciaries have the most current and actionable information. This dynamic approach enables fiduciaries to respond proactively to changes in a stock’s risk profile.
  3. Warnings & Alerts™: ERS provides fiduciaries with Warnings & Alerts™ based on timely updates to the RISK and Performance ratings of all U.S. and Canadian companies. These updates are typically completed within three days of a company’s SEC filings. Leveraging this data, ERS offers clients early warnings of rising financial risks for specific companies. Historically, these alerts have given fiduciaries 3-6 months of advance notice of rising risks, enabling advisors to make proactive decisions to mitigate risks before stock prices are significantly impacted.

Fiduciary Responsibility and SEC Compliance

  1. Protecting Client Assets: The Primary Responsibility: The SEC’s 2019 guidance on fiduciary duty emphasizes the importance of prudent investment decision-making and ongoing monitoring of clients’ portfolios. Fiduciaries are required to evaluate and act upon material risks to client assets. Ignoring statistically valid risk ratings, such as those provided by ERS, may constitute a failure to act prudently and in the best interests of the client.
  2. Proactive Risk Management: Fiduciaries must adopt a proactive approach to risk management, which includes:
    • Assessing the probability and magnitude of stock price declines before investing.
    • Monitoring changes in financial conditions that could increase risk.
    • Adjusting portfolios to mitigate exposure to high-risk stocks.

ERS technology provides a systematic framework for meeting these obligations, ensuring that fiduciaries are not only compliant but also acting in the best interest of their clients.

  1. Consequences of Neglecting Risk Ratings: Failing to use reliable risk ratings exposes fiduciaries to both financial and legal consequences. Clients may suffer significant losses that could have been avoided, leading to potential lawsuits or regulatory action for breach of fiduciary duty.

Conclusion: The Case for Mandatory Risk Ratings

The only effective way for fiduciaries to fulfill their responsibility to protect client assets is to measure and evaluate the probability of stock price declines. ERS provides the most accurate and reliable method for assessing risk, making it an indispensable tool for fiduciaries.

Ignoring ERS risk ratings undermines fiduciary duty, exposes clients to preventable losses, and increases the likelihood of legal repercussions. Therefore, we recommend that the SEC recognize the critical importance of objective risk ratings and consider requiring fiduciaries to utilize proven risk assessment tools like ERS to ensure compliance with their obligations.

Call to Action: Equity Risk Sciences urges the SEC to:

  1. Emphasize the importance of quantitative risk assessments in fiduciary compliance guidance.
  2. Encourage the adoption of reliable risk rating methodologies, such as ERS, as a best practice for fiduciaries.
  3. Promote investor education on the role of risk ratings in protecting assets.

By implementing these measures, the SEC can help ensure that fiduciaries fulfill their obligations, safeguarding investors and strengthening trust in the financial system.

Ray Mullaney asked:

We want to help fiduciaries fulfill their responsibilities.

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Helping Fiduciaries Protect Client Assets:
A Revolutionary Approach to Risk Management

In today’s unpredictable financial markets, fiduciaries—investment professionals entrusted with managing and protecting their clients’ assets—face unprecedented challenges. While opportunities for growth abound, the risks of significant losses remain ever-present. The stakes are high, and so are the expectations: fiduciaries must not only grow their clients’ wealth but also shield it from avoidable harm.

This dual responsibility requires access to tools and technologies that provide actionable insights into the statistical probabilities of market declines. Yet, despite the critical importance of risk management, many fiduciaries lack the resources or methodologies to accurately measure and avoid significant investment losses.

At Equity Risk Sciences (ERS), we’ve developed groundbreaking technology that equips fiduciaries with the tools they need to fulfill their most essential duty: protecting client assets. We believe this innovation deserves the attention of financial journalists who can help raise awareness among fiduciaries and the clients who depend on them.

The Fiduciary’s Dilemma: Balancing Growth and Safety

The fiduciary’s role is unique in the financial world. Unlike other professionals, fiduciaries have a legal and ethical obligation to prioritize their clients’ best interests above all else. This responsibility includes mitigating risks, making prudent investment decisions, and avoiding significant losses.

However, many fiduciaries rely on traditional research tools that focus on upside potential while offering limited insight into downside risk. This approach leaves clients exposed to preventable losses—particularly during periods of market volatility. For fiduciaries to truly fulfill their responsibilities, they must adopt a proactive, data-driven approach to risk management.

ERS: The Future of Fiduciary Risk Management

Equity Risk Sciences has developed a proprietary system that measures and rates the statistical probability, magnitude, and timing of stock price changes. Unlike traditional research providers, ERS focuses on identifying and quantifying downside risks. Our technology is built on 35 years of historical data covering over 15,000 U.S. and Canadian public companies, making it one of the most robust and reliable risk analysis tools available.

Key features of ERS technology include:

  • Objective Risk Ratings: Fiduciaries can access clear, numerical ratings that indicate the probability and magnitude of a stock’s decline.
  • Actionable Insights: ERS provides daily updates, enabling fiduciaries to monitor changes in risk profiles and adjust portfolios proactively.
  • Proven Accuracy: Decades of testing have demonstrated that ERS risk ratings consistently identify stocks with a high likelihood of significant price declines.

About Equity Risk Sciences: Equity Risk Sciences (ERS) is a financial technology company based in North Kingstown, RI. Our mission is to make investing safer and more profitable by providing the most accurate and reliable risk ratings available. For more information, visit www.InvestLabs.ai.