KOHL HIGHLIGHTS SENIOR INVESTMENT SCAMS AT AGING COMMITTEE HEARING
WASHINGTON - In the wake of numerous reports of investment scams targeted at senior citizens, U.S. Senator Herb Kohl (D-WI), Ranking Member of the Special Committee on Aging, today held a hearing to draw attention to this growing problem.
"As our population ages and seniors live longer, they will look for ways to make their retirement income last as long as they do," Kohl said. "We need to make sure that they can safely invest without the added worry that an unscrupulous advisor will run off with their money."
Kohl noted that seniors are struggling to meet rising health and day-to-day living costs, bearing more risk in their pension plans, and anticipating long term care expenses. Faced with this shortfall, they are turning to investments to increase their retirement income and some are falling prey to con artists.
According to estimates by Consumer Action, a consumer education and advocacy group, while seniors 60 and older make up 15 percent of the U.S. population, they account for about 30 percent of fraud victims.
Kohl's home state of Wisconsin saw a 21 percent increase in the number of financial abuse cases in 2004, which includes instances of investment fraud. Experts estimate that only one in 25 of these types of cases are being reported nationwide.
In her written hearing testimony, Patricia Struck, Administrator of the Division of Securities with the Wisconsin Department of Financial Institutions, stated that senior investment fraud would be one her division's greatest challenges over the next decade.
She added: "As baby boomers swell the retiree population, state securities regulators are concerned that financial scams targeting seniors also will rise. Con artists read the headlines, and they need little encouragement to emerge from the side streets and back alleys to Main Street where older investors live."
Kohl outlined three policy areas that he will work on to help address the growing problem of senior investment fraud:
Promote consumer education to help seniors spot common scams and report questionable investments to the appropriate agencies and authorities. Kohl distributed a "tip sheet" at the hearing and will make it available in his offices in Wisconsin.
Work on legislation to tighten rules that require sellers of securities to disclose their credentials and training, as well as any hidden fees or high risk investments they sell, and increase penalties for those who run investment scams.
Increase training and resources for Federal and State law enforcement officials to investigate and prosecute senior investment fraud. Kohl also urged passage of the Elder Justice Act (S. 2010), which includes key research and training provisions to combat investment fraud.
Kohl: "If seniors take away one message from today's hearing, I hope they remember this: It took you a lifetime to save your retirement money -- take five more minutes to make the call that could protect it."
The U.S. Securities and Exchange Commission's Office of Investor Education The SEC is the federal agency which oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Its website contains a page designated for seniors. www.sec.gov/investor/seniors.shtml, (202) 942-9634
North American Securities Dealers (NASD) NASD serves as the primary private-sector regulator of the securities industry. It oversees the activities of brokerage firms and registered securities representatives. Its website contains information to assist in making investment choices, investor alerts and an investor complaint center. www.nasd.com, (301) 590-6500
North American State Securities Administrators Association NASAA is an association representing the states' securities administrators. On its website you will find a senior investor center, an investor's bill of rights and other helpful financial education tools. www.nasaa.org/
The Wisconsin Department of Financial Institutions' Division of Securities The Division of Securities regulates investment transactions in the state of Wisconsin. A good place to start if you live in Wisconsin. www.wdfi.org/fi/securities/, (608) 264-7969