Protecting Seniors Strategy
With an aging population expected to increase in coming years, the SEC will focus regulatory and educational efforts across the country on protecting senior citizens from investment scams and unsuitable recommendations. This initiative has several components investor education, aggressive enforcement, and targeted examinations as outlined below.
Investor Education and Assistance
- Because an educated investor is best able to protect himself or herself from a fraud, scam or high-pressure sales tactics, investor education and outreach is an important component of our efforts.
- We will target speaking engagements, investment fairs, and other outreach opportunities to educate and inform senior citizens about investment scams and fraud.
- Many seniors, and many children and caregivers of seniors, use the Internet to search look for information on investing. The SEC recently created a page on its website aimed specifically at senior citizens: www.sec.gov/investor/seniors.shtml. This page provides links to critical information on investments that are commonly marketed to seniors including variable annuities, equity-indexed annuities, promissory notes, and certificates of deposit. It also warns against the dangers of listening to the sales pitches of cold-callers and alerts seniors to the very real threat of affinity fraud scams that prey upon members of identifiable groups, such as religious or ethnic communities, professional groups, or the elderly.
- We have also created a Senior Care Package, a collection of our most popular brochures for seniors. Seniors can view the care package online on the SEC’s seniors webpage, and they can order hard copies by clicking on a link that will send their request via email to OIEA. Regional and district offices that receive requests for the care package should mail the brochures directly to the investor. The brochures in the care package will also be distributed at public investor education gatherings.
- The SEC’s enforcement staff will continue to aggressively investigate and file actions against those who prey upon senior citizens. In particular, the SEC will continue to bring emergency actions to shut down ongoing offering frauds and thereby prevent further investor harm and recover assets. These cases often involve frauds that lure prospective investors with claims of outlandish returns and purportedly risk free investments. These schemes involve investments of all types — e.g., limited partnerships or other interests in oil and gas, real estate or other ventures, promissory notes, and “fake certificates of deposit,” to name just a few.
- Each SEC regional and district office will work closely with self-regulatory organizations as well as local federal, state, and criminal and civil agencies to identify possible fraudulent offerings that target seniors, and to ensure that appropriate action is taken. SEC will continue to coordinate and share our resources, information, and expertise.
- Where the conduct is criminal in nature, SEC will continue to actively support criminal prosecutions.
- The SEC will coordinate with other regulators, including with SROs and state securities regulators, with respect to examinations of broker-dealers and advisers. Regional examination planning “summit meetings” will include sharing information with respect to firms that specialize in recommending securities or providing advice to seniors. In particular, regulators will share customer complaints and other information that may indicate that firms are targeting seniors for inappropriate sales of securities, and will conduct on-site examinations of these firms.
- Examinations of broker-dealers and investment advisers will focus on recommendations made to seniors to evaluate whether the recommendations are suitable for the investor in light of the investor’s age, investment objectives, net worth and other factors.
- Particular focus will be on recommendations of securities that may be more risky, or include higher fees than other products. For example, examinations will focus on the suitability of recommendations of purportedly high yield or “guaranteed” products, on sales of variable annuities, and on sales of hedge funds.
- Examinations will also focus on the manner in which seniors may be drawn to sales pitches. For example, examiners will be evaluating sales literature, promotions and supervision of “free lunch” seminars that target seniors.