Lawmakers, the Securities and Exchange Commission, and state regulators are bent on making sure advisors with designations touting expertise when it comes to helping seniors are closely scrutinized. Speaking at a hearing held by the Senate’s Special Committee on Aging September 5, SEC Chairman Christopher Cox said that over the past year the securities regulator, in tandem with state regulators, NASD, and NYSE, has been examining firms that sponsor “free lunch” sales seminars.
The SEC’s Office of Compliance, Inspections, and Examinations (OCIE) along with NASAA and FINRA will unveil the final and complete results of these coordinated exams at the SEC’s second annual “Seniors Summit” in Washington September 10; the results will also be posted on the SEC’s Web site, www.sec.gov. As suspected, Cox said the exam results show that “despite being advertised as ‘educational’ or touting ‘nothing will be sold,’ the purpose of these seminars is to convince attendees to open new accounts with the sponsoring firm–and ultimately, to sell financial products to seniors.” The advertisements and mailings used to lure seniors to the events are also “confusing or misleading about the intent of the event,” Cox said.
Over the past year, Cox noted, the SEC’s enforcement division has brought at least 40 enforcement actions involving fraud on seniors.
Cox told members of the Committee on Aging, which is chaired by Senator Herb Kohl (D-Wisconsin), that state regulators are considering and developing “model regulation” that would prohibit advisors from using a designation to mislead investors.
The “Federal government does have a role to play,” he added. Cox told reporters after his testimony that he believes a “collaborative approach” between state regulators, the SEC, and Congress in developing designations would be the best solution. Cox said that the issue of duping seniors is “too complex” for a federal solution alone, adding that the SEC will address at the senior summit whether “an act of Congress” is needed.
“Working with Congress, we should be able to make short work” of this problem, Cox said.