More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
Many baby boomers are moving further out on the risk curve in a desperate attempt to capture returns before retirement. That, say regulators, is exposing them to more investment scams.
The Wall Street Journal reports that securities regulators and prosecutors are “battling what they say is a nationwide surge in investment fraud against baby boomers.” The reason, the paper says, is that investors are “overcompensating” for losses recently suffered, and the number of criminal complaints filed this year is expected to be a record.
“Last year, there were 1,241 criminal complaints, cease-and-desist orders and other regulatory actions launched at the state level involving investors age 50 or older, according to the North American Securities Administrators Association, a group of state regulators. That was more than double the 506 cases in 2009."
The problem is "rampant" throughout the country, the paper quotes Matt Kitzi, Missouri's securities commissioner and chairman of the association's enforcement committee, as saying.
“The Securities and Exchange Commission, which regulates investment-adviser firms with at least $25 million in assets under management, doesn't track alleged frauds by the age of the victim. But officials have grown worried enough about the vulnerability of older investors that the agency plans soon to issue ‘additional guidance about potential investment scams that older Americans should be looking out for,’" SEC Chairman Mary Schapiro said in a statement to the paper.
There are about 77 million baby boomers in the United States, or 25% of the nation's population, and the oldest began turning 65 this year, the Journal notes. Many of their retirement portfolios “were ravaged by the financial crisis, erasing billions of dollars in assets.”
The Securities and Exchange Commission issued an “Investor Alert” in September that warned investors of pervasive fraud in pitches aimed at holders of self-directed IRAs.