Securities regulators across North America are bolstering investor education programs in an attempt to prevent fraud.
By Associated Press
Published September 5, 2003
WASHINGTON - Kenneth Reusser of Beaverton, Ore., an 82-year-old former Marine aviator and decorated veteran of more than 200 combat missions in three wars, says he lost more than $260,000 in a high-yield investment scheme he learned about from friends he met through a club called "Life After 50."
Reusser and his wife, Trudy, filed a personal bankruptcy petition last week, a step ahead of the anticipated foreclosure of their hand-built home worth more than $1-million.
Often living on fixed incomes and sometimes desperate about money, older investors are being targeted with complex investment scams promising huge returns as the stock market churns and health care costs climb, state securities regulators said Thursday.
"I'm here as a very embarrassed individual," Kenneth Reusser said at a news conference with state regulators. "We just trusted the people."
The North American Securities Administrators Association is alerting seniors to the dangers of investment fraud and urging them to take control of their finances. The group, which represents state and provincial securities regulators in the United States, Canada and Mexico, announced new investor education programs and a senior investor resource center on its Web site.
The regulators "are deeply concerned that a "perfect storm' for investment fraud is brewing and our nation's 35-million seniors are most at risk," said Christine Bruenn, the group's president and Maine's securities administrator. "To a senior living on a fixed income, no amount of money lost is too small and could mean the difference between a secure and dignified retirement and a life of uncertainty and despair."
Millions of people who are retired or soon-to-be retired are concerned, some even desperate, about their finances - and more vulnerable than ever to investment fraud and abuse, Bruenn said.
Bruenn used the occasion to assail legislation pending in the House that would preclude states from mandating changes in how firms do business when they sign settlements with them to resolve allegations of fraud and abuse.
Tips from state securities regulators for older investors to help protect themselves against investment fraud:
Beware strangers offering deals: Trusting strangers is a mistake everyone makes when it comes to their personal finances. Extensive background information on investment salespeople and firms is available from Central Registration Depository files that can be provided by your state securities agency.
Keep your money under your control: Beware of anyone who suggests putting your money into something you don't understand or who urges that you leave everything in his or her hands.
Don't judge a book by its cover: Successful con artists can sound and look extremely professional and have the ability to make even the flimsiest investment deal sound as safe as putting money in the bank.
Don't go along out of fear: Con artists know that you worry about outliving your savings. Fear can cloud your good judgment. An investment that is right for you will make sense because you understand it and feel comfortable with the risk involved.
Don't act when pain or grief distracts you: The death or hospitalization of a spouse or other loved one has many sad consequences - financial fraud shouldn't be one of them. If you find yourself suddenly in charge of your own finances, get the facts before you make any decisions.
Stay involved and ask tough questions: Don't compound the mistake of trusting an unscrupulous investment professional or outright con artist by failing to keep an eye on the progress of your investment. Insist on regular written and oral reports. Look for signs of excessive or unauthorized trading of your funds.
Don't let pride or fear stand between you and help: Con artists know that you might hesitate, out of embarrassment or fear, to report that you have been victimized in a financial scheme. Con artists prey on your sensitivities and count on these fears preventing or delaying the point at which authorities are notified of a scam.