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Last Week the SEC held its second annual "Seniors Summit" aimed at examining how regulators and others can coordinate efforts to protect seniors from abusive sales practices and investment fraud. According to data from the SEC, 75% of the nation’s consumer financial assets are held by households headed by someone who is fifty or older. And apparently those households are increasingly targeted for investment schemes that too often involve misleading and in some cases fraudulent practices.

In connection with the summit, the SEC (along with the North American Securities Administrators Association and the Financial Industry Regulatory Authority) issued a report that sheds some light on the nature and extent of the problem. Regulators conducted 110 examinations of broker-dealers, investment advisors and other financial services firms hosting “free lunch” seminars—seminars pursuant to which a variety of financial services were offered in connection with a free lunch or other perk. Among other things the examination revealed that:

Most of these seminars were aimed at seniors.
Half of the examinations found that firms used misleading or exaggerated advertising material.
In some cases, registered representatives recommended unsuitable investments
In some instances, the sales seminars may have involved fraud

The report is an important first step to combating investment fraud aimed at seniors because it provides some empirical evidence about practices that many people suspected but had not confirmed. The report also provided some helpful data about “best practices” both for seniors who examine investment opportunity and for financial services firms conducting these seminars. However, the report also was disturbing because it appeared to confirm that seniors—even relatively sophisticated ones—tend to be particularly susceptible to high pressure sales tactics and fraudulent investment schemes. (Indeed, at least one survey reveals that although individuals who are sixty and older make up only 15% of the population, they account for 30% of the fraud victims). And hence the report appears to reflect the tip of the iceberg of what could be a major problem in the coming years as the baby boom generation ages and their financial security becomes more uncertain.

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Last Week the SEC held its second annual "Seniors Summit" aimed at examining how regulators and others can coordinate efforts to protect seniors from abusive sales practices and investment fraud. According to data from the SEC, 75% of the nation’s consumer financial assets are held by households headed by someone who is fifty or older. And apparently those households are increasingly targeted for investment schemes that too often involve misleading and in some cases fraudulent practices.

In connection with the summit, the SEC (along with the North American Securities Administrators Association and the Financial Industry Regulatory Authority) issued a report that sheds some light on the nature and extent of the problem. Regulators conducted 110 examinations of broker-dealers, investment advisors and other financial services firms hosting “free lunch” seminars—seminars pursuant to which a variety of financial services were offered in connection with a free lunch or other perk. Among other things the examination revealed that:

Most of these seminars were aimed at seniors.
Half of the examinations found that firms used misleading or exaggerated advertising material.
In some cases, registered representatives recommended unsuitable investments
In some instances, the sales seminars may have involved fraud

The report is an important first step to combating investment fraud aimed at seniors because it provides some empirical evidence about practices that many people suspected but had not confirmed. The report also provided some helpful data about “best practices” both for seniors who examine investment opportunity and for financial services firms conducting these seminars. However, the report also was disturbing because it appeared to confirm that seniors—even relatively sophisticated ones—tend to be particularly susceptible to high pressure sales tactics and fraudulent investment schemes. (Indeed, at least one survey reveals that although individuals who are sixty and older make up only 15% of the population, they account for 30% of the fraud victims). And hence the report appears to reflect the tip of the iceberg of what could be a major problem in the coming years as the baby boom generation ages and their financial security becomes more uncertain.

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