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Updated Investor Alert for Seniors: Five Red Flags of Investment Fraud

download Although many believe in upholding the old adage to respect one's elders, there are others who seek to take advantage of older Americans, targeting them for investment fraud.  Unfortunately, many senior citizens fall victim to these scams if not fully informed.

Common financial investment scams include:

  • Pyramid or "Ponzi" schemes
  • Promissory notes
  • False loans or private placements
  • Currency scams
  • Investing in precious metals
  • Prime bank fraud
  • Life settlements, or viaticals
  • Unregistered investments

To help older Americans avoid these and other fraudulent investments, the SEC's Office of Investor Education and Advocacy is issuing an Updated Investor Alert for Seniors.  This alert outlines five "red flags" of which one should be aware, including:

  • Unregistered and unlicensed sellers. Always research the background of the individuals or firms selling you investments, including their registration/license status and disciplinary history.  Investor.gov offers a free online database, which enables you to search for your investment professional. 
  • Promises of high returns with little or no risk. Every investment comes with a degree of risk.  You are unlikely to see high returns with little or no risk.
  • Pressure to buy quickly. You should never be rushed into making an investment.  A reputable investment professional understands that investors need time to research the investment.
  • Free meals. Instead of being used to educate attendees, "free lunch" seminars are often used to lure new clients and to sell investment products.  Before attending one of these events, commit to not purchasing anything or opening an account while at the seminar.
  • Red flags in the financial professional's background. Use BrokerCheck to find out about "red flags" on any professional before engaging them for services.  A broker check report will disclose such things as past criminal records, customer complaints, bankruptcy and much more.

Keeping this investor alert in mind, those financial industry firms should consider using this as a checklist to further train their representatives on the important considerations for servicing aging clients.  With an eye always towards advancing internal controls, through training, effective firm policies and supervisory oversight, you will be able to protect and become better aware of warning signs that indicate potential senior investment fraud. If you have questions or would like additional guidance on other aging client protections, Jacko Law Group can help. For more information, please contact JLG at 619.298.2880 or [email protected].

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