SEC Targets Free Lunch Scams
Here's some more consumer news, from Laurence Arnold and Elizabeth Hester of Bloomberg News:
The U.S. Securities and Exchange Commission is cracking down on hard-sell investment seminars that seek to lure senior citizens with the promise of a free lunch.
SEC Chairman Christopher Cox said the agency is scrutinizing brokers and advisers who conduct meetings over free meals at "fancy hotels and restaurants." The effort will begin in Florida in the coming weeks, Cox said today at a conference in Washington hosted by the Consumer Federation of America.
"If we find that instead of a legitimate sales seminar and a free meal, seniors are being exposed to pitches for unsuitable products, with high-pressure sales tactics and wild claims about projected returns, and no disclosure of the actual risks of the investment, we'll move in hard and fast," Cox said.
The initiative is part of "a comprehensive national strategy for protecting older investors" that is being carried out by SEC field offices, state and local regulators and law enforcement, said Cox, 53. NASD enforcement chief James Shorris, named to the post yesterday, said his agency will also make protecting elderly investors a priority.
Shorris, 45, said his agency, which regulates broker-dealers and was formerly known as the National Association of Securities Dealers, is "very concerned about the marketing of financial products to seniors and those approaching retirement."
The SEC will review whether sales pitches and printed materials given to seniors at seminars are pre-approved by a firm's supervisors, as required by securities laws, Cox said.
"Seniors can be vulnerable to deceptive sales practices in the financial services arena," said Jon Dauphine, director of economic security strategies at the American Association of Retired Persons. "Sometimes, seniors are specifically targeted by bad actors who try to use scare tactics to sell fraudulent or inappropriate financial products."
Seniors deserve extra protection, Cox said, because they're common targets of fraud and " may not have the time to recoup their losses, and their savings may represent all that they have left in the world."
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