Senior investment fraud is right up there with taking candy from a baby or kicking a puppy.
It is quite simply a despicable crime that should garner no sympathy for individuals who commit such offenses.
It is a national problem and needs continuous attention from regulators and the financial services industry. The bottom line is that it is the responsibility of all concerned to protect older Americans from investment fraud and sales of unsuitable securities.
Along those lines, there is a positive proposal being put forth by William F. Galvin, Massachusetts secretary for the commonwealth, as reported in the March 12 issue by InvestmentNews reporter Charles Paikert. After filing charges against two annuity salesmen, Mr. Galvin proposed the nation’s first set of regulations requiring advisers who claim expertise or certification in financial issues affecting older Americans to prove they have the special training to do so.
“We’ve seen a pattern of abuse by people with a specialty that implies an expertise in financial matters pertaining to older people,” Mr. Galvin said in an interview with Mr. Paikert.
“But many of these designations are simply used as marketing tools, and the goal is usually to sell annuities. We’ve seen an upsurge in the number of these cases and decided it was time to do something about it,” Mr. Galvin said.
Kudos to him for taking a step in the right direction.
With the first of the baby boomers turning 60 last year, the Washington-based North American Securities Administrators Association Inc. warned in a study that investment fraud against the elderly, which already accounts for nearly half of all investor complaints received by state securities regulators, could grow significantly in coming years.
All the numbers are right out there for everyone to see: 76 million baby boomers with $8.5 trillion in investible assets. Ask anyone in the financial services world, and they will say that retirement is the most important issue facing the industry.
Therefore it becomes quite obvious that retirees deserve proper protection. There needs to be an increase in training and resources for federal and state law enforcement officials to investigate and prosecute senior investment fraud.
“Another American baby boomer will turn 60 every eight seconds for the next 20 years,” Securities and Exchange Commission Chairman Christopher Cox said in a published report. “As the nation’s assets increasingly are held by older Americans, fraudsters can be expected to follow Willie Sutton’s example and go where the money is.”
Mr. Cox is absolutely correct in his assessment, and that is why it is essential for the SEC to fine-tune its various partnerships with state regulators to safeguard the assets of older Americans.
Initiatives, at the state and federal levels, continually need to be put in place to find ways to detect abusive sales tactics and create aggressive enforcement of securities laws in cases of fraud against seniors. There also needs to be increased awareness and investor education programs.
What’s more, all regulatory agencies need to continue to work together and keep the lines of communication open to exchange information to help identify and bring administrative, civil and criminal actions to shut down scams targeting older investors.
Although there are many local and national initiatives designed to protect older Americans from investment fraud, the key for regulators is to not let their guard down.
There is a huge temptation for the scammers, so it is clear there will be a proliferation of schemes involving unlicensed individuals promoting and selling unregistered securities to older Americans.
Regulators and the financial services industry need to send a clear message to the bad guys that if they cross the line, they will be dealt with severely.