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SEC Issues Updated Investment Fraud Alert for Elderly Investors

September 12, 2016 Blog

In July, the Securities and Exchange Commission (SEC) issued an Updated Investor Alert warning of investment fraud schemes targeting older individual investors. The Updated Investor Alert identifies five “red flags” that are hallmarks of frauds targeting elderly investors. We summarize these red flags below:

The SEC’s Five “Red Flags” for Elder Investor Fraud

1. Unregistered and Unlicensed Sellers

In most cases, individuals offering investment opportunities should be both registered and licensed. If the person offering you an investment opportunity is not registered and licensed, this should be your first warning sign that the “opportunity” may actually be a fraudulent scheme.

You can research brokers’ and investment advisors’ credentials online through the SEC’s Registered Investment Professional database and FINRA’s BrokerCheck® website. We provided links to these resources in our article: How Well Do You Know Your Broker or Investment Advisor?

2. Promises of High Returns with Little or No Risk

If there were truly investment opportunities that offered significant risk-free returns, everyone would invest in them, and you wouldn’t have to go to seminars or read brochures to learn about how to grow your portfolio without putting your nest egg at risk. But, the reality is that higher returns inherently come with higher risks. If someone is trying to convince you otherwise, this is a likely sign of an investment scam.

3. Pressure to Buy Quickly

Reputable brokers and investment advisors should want you to take the time to research new investment opportunities and make sure that you fully understand where you are putting your money. High-pressure sales tactics and opportunities presented with limited buying windows should be carefully scrutinized for additional signs of fraud.

4. Free Meals

Scam artists will often use free meals and other gimmicks to try to lure unsuspecting investors. As stated by the SEC, “The ultimate goal of free meal investment seminars is typically to lure new clients and to sell investment products, not to educate the public.” If you attend an investment seminar, be aware that the price of your “free meal” is likely subjecting yourself to hard-sell tactics that may continue long after the seminar is over. In most cases, the harder someone pushes to sell an investment, the higher the likelihood that the “investment” is actually a fraud.

5. Red Flags in the Financial Professional’s Background

Finally, even if an investment advisor or broker is licensed and registered, there could still be events in his or her past that hint at a potential fraudulent investment scheme. As noted in the SEC’s Updated Investor Alert, federal tax liens, client complaints and frequently moving between brokerage firms are all potential warning signs of an untrustworthy investment professional.

Speak with a Securities Fraud Attorney at Zamansky LLC

If you have concerns about a potential investment scam, the attorneys at Zamansky LLC can help you protect your savings and, if necessary, enforce your legal rights. To speak with one of our attorneys in a free, confidential consultation, please call (212) 742-1414 or send us a message online today.