Red Flags for Senior Investor

Older Americans are often the targets of investment fraud.  The SEC’s Office of Investor Education and Advocacy recently issued Updated Investor Alert to help seniors identify signs, Red Flags, that what is offered as an investment may actually be a fraud.  Below are five “red flags” seniors should look out for when making an investment decision.

• Always check whether the person offering to sell you an investment is registered and licensed, even if you know him or her personally.  Unregistered and unlicensed persons commit many of the frauds that target older investors.  Researching the background of the individuals and firms selling you investments, including their registration/license status and disciplinary history, is easy and free. Use investor.gov or FINRA Broker Check to search for your investment professional or contact your state securities regulator.

• Remember – if it sounds too good to be true, it probably is. The promise of a high rate of return, with little or no risk, is a classic warning sign of investment fraud.  Every investment carries some degree of risk, and the potential for greater returns usually comes with greater risk.  Avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.”

• No reputable investment professional should push you to make an immediate decision about an investment, or tell you that you have to “act now.”  If someone pressures you to decide on an investment without giving you time to do your research, walk away.

• Be leery of a free lunch.  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 decide to attend one, commit to yourself before the seminar that you won’t purchase anything or open an account while at the seminar.  Even if the free meal does not come with a high-pressured sales pitch, you should expect the “hard sell” in subsequent contacts from the person selling the investment.

• Even if an investment professional is in good standing with his or her regulators, you should be aware of potential red flags in the professional’s background.  SEC, FINRA, and state securities regulator records can be used to identify red flags for potential problems, including:

(1) employment at firms that have been expelled from the securities industry

(2) personal bankruptcy

(3) termination

(4) being subject to internal review by an employer

(5) a high number of customer complaints

(6) failed industry qualification examinations

(7) federal tax liens

(8) repeatedly moving firms

Recovery Options

The foregoing information, which is all publicly available, is being provided by The White Law Group.  The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For information on the firm please visit www.whitesecuritieslaw.com.

For a free consultation with a securities attorney, please call The White Law Group at 1-888-637-5510.