With the first 'Baby Boomers' turning 60 this year, state securities regulators warn that investment fraud among seniors, which already accounts for nearly half of all investor complaints received by state securities regulators, could grow significantly.
"The current landscape facing senior investors is littered with slick schemes and broken dreams," said Patricia D. Struck, Wisconsin Securities Administrator and President of the North American Securities Administrators Association (NASAA).
"While our cases of senior investment fraud may not make national headlines, they are devastating in their impact to the victims and their families," Struck told the Seniors Summit hosted by the U.S. Securities and Exchange Commission.
Struck released a survey which found that an estimated 44 percent of all investor complaints received by state securities regulators are made by seniors. In addition, the survey found that 31 percent of all enforcement actions taken by state securities regulators involve senior investment fraud.
In Florida, for example, an estimated 75 percent of all investor complaints are made by seniors. The survey also shows that in North Carolina an estimated 50 percent of all enforcement actions involve cases of senior investment fraud.
"These early results show that senior investment fraud is a serious ongoing problem and we fear that it will only grow without targeted enforcement and enhanced investor education," said Struck.
"We will not tolerate the victimization of senior investors by con artists. The most effective weapon against senior investment fraud is a one-two punch of aggressive enforcement efforts combined with financial education to protect investors from unscrupulous individuals," she added.
The NASAA survey also found that unregistered securities, variable annuities, and equity-indexed annuities are the financial products most commonly involved in senior investment fraud.
In Tennessee, an estimated 80 percent of the state's senior investment fraud cases involve unregistered securities, while California and Maryland estimated these cases make up 75 percent of its senior investment fraud caseload. Cases involving variable or equity-indexed annuities represented an estimated 65 percent of the caseload in Massachusetts, and 60 percent of the caseload in Hawaii and Mississippi.
"While my colleagues and I currently see a proliferation of troubling schemes involving unlicensed individuals promoting and selling unregistered securities to seniors, we are also concerned about the way in which variable and equity-indexed annuities are marketed and sold to seniors," said Struck.
"Variable and equity-indexed annuities are legitimate and suitable investments for some, but we believe these products are unsuitable for many retirees and are being aggressively pitched to seniors through investment seminars nationwide."