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 A hearing Wednesday by the Senate Special Committee on Aging highlighted the conduct of so-called senior financial investment specialists
-- a designation said to be devoid of real value and often obtained merely by attending a weekend seminar and passing an open-book, multiple-choice test. Many seniors have lost their life savings as a result of being steered toward investments that were inappropriate for them by people using the designation, officials say.
"Seniors should be able to trust the people who invest their money," said Sen. Herb Kohl, D-Wis., the panel's chairman. "They should not be worried that the title after their adviser's name is scarcely more than a marketing ploy."
People 60 and older make up 15 percent of the country's population but account for an estimated 30 percent of fraud victims. With baby boomers swelling the ranks of retirees, regulators expect an increase in financial scammers preying on them.
Christopher Cox, the chairman of the Securities and Exchange Commission, testified that in the past two years, the agency has brought more than 40 enforcement cases involving alleged fraud against seniors, many in coordination with state authorities.
On Wednesday, the SEC announced that it had charged 26 people with defrauding thousands of seniors out of their retirement savings through a hotel timeshare scheme.
The people behind the scheme allegedly raised $428 million by promising investors guaranteed returns from renting timeshares in several hotels in Cancun, Mexico, the SEC said. The agency also alleged that a nationwide network of salespeople illegally pocketed $72 million in commissions from the scheme.
"Protecting senior investors is one of the most important issues of our time," Cox said. "Every year, as medical miracles allow us to enjoy a larger population of senior citizens, the task of protecting retirement nest eggs grows in importance."
The SEC, authorities in seven states and securities industry regulators are expected to make public next week the results of their extensive investigation of the so-called free lunch or dinner seminars. The events, often held at swank hotels and restaurants, lure seniors with promises of the proverbial "free lunch" and are popular among the elderly, especially in states like Florida with large numbers of retirees.
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 "Many are lonely. It's a social event for them," said Lori Swanson, Minnesota's attorney general.
Often, though, rather than a legitimate sales seminar, the seniors are exposed to pitches for unsuitable products with high-pressure sales tactics and no disclosure of the actual risks of an investment, regulators say.
By law, the sales pitches made at the seminars and materials provided to participants must be approved by a brokerage or investment firm's supervisors.
Seniors attending the seminars often are subject to fraud, misrepresentations and other violations of the securities laws, according to Joseph Borg, president of the North American Securities Administrators Association, which represents state securities regulators.
The seven states involved in the investigation are Alabama, Arizona, California, Florida, North Carolina, South Carolina and Texas.
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On the Net:
Securities and Exchange Commission: http://www.sec.gov/
North American Securities Administrators Association:
http://www.nasaa.org/
Senate Special Committee on Aging: http://aging.senate.gov/
[Associated Press; by Marcy Gordon]
Copyright 2007 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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