PRESS RELEASE
Securities Department Warns Seniors to be on the Lookout for Investment Fraud and Launches "The Senior Investor Resource Center"
 
For Immediate Release
Thursday, September 04, 2003 
 
Contact: Irving L. Faught, Administrator
  Oklahoma Department of Securities
  405-280-7700
 
 
Oklahoma City/////  IRVING FAUGHT, ADMINISTRATOR OF THE SECURITIES DEPARTMENT, ALERTED SENIOR INVESTORS IN OKLAHOMA TO THE DANGERS OF INVESTMENT FRAUD AND URGED SENIORS TO TAKE CONTROL OF THEIR FINANCIAL HEALTH.

“I AM CONCERNED THAT UNSTEADY INVESTMENT MARKETS, LOW INTEREST RATES, AND RISING HEALTH, PRESCRIPTION DRUG AND BASIC LIVING EXPENSES MAY BE BREWING UP A MAJOR STORM OF INVESTMENT FRAUD AND SENIORS ARE MOST AT RISK,” SAID FAUGHT.

Older investors are being targeted with increasingly complex investment scams involving unregistered securities, promissory notes, charitable gift annuities, viatical settlements, and Ponzi schemes all promising inflated returns.

“Some phony investment products and the slick pitches of high returns used to sell them, sound tempting to many seniors who’ve seen their retirement accounts dwindle in recent years and who do not have the benefit of time to recoup their losses,” Faught said.

“For example,” Faught said: “ senior Oklahomans have been victims of "viatical settlement contracts" that involved promises to pay high interest from the maturity of life insurance policies of terminally ill or elderly patients. These investments are turning out to have longer time horizons than represented and will result in large losses to the investors. Other products marketed to seniors are fake certificates of deposit or CDs that have far off maturities and severe penalties for early withdrawal. We have also seen sales of certain classes or types of mutual funds that are not often suitable for seniors, because the have excessive fees and related charges inappropriate for shorter term investors. We see sales methods that promote inappropriate funds to the investors that favor the seller over the buyer.” For the specifics about Department enforcement actions involving these and other fraud cases, see the Department’s website at www.securities.state.ok.us.

Faught urges seniors not to be ashamed to admit that they have been victims of investment fraud. “Silence will only help the con artists lead another victim into the trap. Every day that financial fraud goes unreported is another day that criminals can steal retirement savings from unsuspecting seniors,” Faught said.

Common sense is a good guide to knowing when a deal is too good to be true. However, you do not have to rely on common sense alone,” Faught said. Senior investors can contact the Department with any questions about an investment fraud. Seniors also can learn more about the dangers of investment fraud by visiting the online Senior Investor Resource Center link on the Department’s website. The Senior Investor Resource Center has been developed specifically for senior audiences and offers a variety of important information and resources, including:

  • A checklist of questions seniors can ask before making an investment decision;
  • common sense solutions to protect your nest egg from investment fraud;
  • information about the top frauds targeting seniors; and
  • links to a variety of investor education publications and programs offered by state securities regulators and others to help seniors fight investment fraud.

Faught offered the following tips to help investing seniors:

  • DO NOT BE A COURTESY VICTIM. Con artists will not hesitate to exploit your good manners. Save your good manners for friends and family members, not strangers looking for a quick buck!

  • CHECK OUT STRANGERS TOUTING STRANGE DEALS. While you should be cautious about anyone, even those you know, who advise you concerning your money including insurance agents and tax advisers, trusting strangers can be a big mistake. Extensive background information on investment salespeople and firms is available from the Central Registration Depository (CRD) files available from the Department.

  • ALWAYS STAY IN CHARGE OF YOUR MONEY. 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.

  • DO NOT JUDGE A BOOK BY ITS COVER. Successful con artists sound and look extremely professional and have the ability to make even the flimsiest investment deal sound as safe and sound as putting money in the bank. The sound of a voice, particularly on the phone, has no bearing on the soundness of an investment opportunity.

  • WATCH OUT FOR SALESPEOPLE WHO PREY ON YOUR FEARS. 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.

  • DO NOT MAKE A TRAGEDY WORSE WITH RASH FINANCIAL DECISIONS. The death or hospitalization of a spouse has many sad consequences and financial fraud should not be one of them. If you find yourself suddenly in charge of your own finances, get the facts before you make any decisions. Arm yourself with information and your confidence will send con men running.

  • MONITOR YOUR INVESTMENTS AND ASK TOUGH QUESTIONS. Do not 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. And if you are stalled when you want to pull out your principal or profits from an investment, you have uncovered someone who wants to cheat you.

  • DO NOT LET EMBARRASSMENT OR FEAR KEEP YOU FROM REPORTING INVESTMENT FRAUD OR ABUSE. Con artists know that you might hesitate to report that you have been victimized in financial schemes out of embarrassment or fear. Con artists prey on your sensitivities and, in fact, count on these fears preventing or delaying the point at which authorities are notified of a scam. Every day that you delay reporting fraud is one more day that the con artist is spending your money and finding new victims.
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This press release, and related information, is available on the Securities Commission's web site at securities.ok.gov, by phone at (405) 280-7700, or in writing at:  Oklahoma Securities Commission, 204 North Robinson, Suite 400, Oklahoma City, OK 73102.