SEC and FINRA Say “Free Lunch” Seminars are Investment Scams Targeting Seniors

FINRA, SEC, and state regulators are saying that the “free lunch” investment seminars for senior citizens are actually high-pressure sales pitches, involving fraud and misleading claims about financial products that are not suitable for its elderly audience. A report of these findings will be issued to the public this week.

Alabama, California, North Carolina, Florida, Texas, Arizona and South Carolina are the U.S. states with the largest numbers of retirees. All seven states were included in the probe. The investigation took place from April 2006 to 2007 and concentrated on 110 investment firms and branch offices that held “free lunch” seminars for seniors.
The report blames investment firms for failing to properly supervise the employees that conducted the senior seminars.

The law states that sales pitches and materials at the seminars have to be approved by investment firm supervisors or brokerages. SEC Chairman Christopher Cox affirmed his agency’s commitment to stop anyone attempting to take advantage of senior investors.

Findings from the year long investigation included the following:

• “Free lunch” seminars were promoted as workshops or sessions where no products would be sold. However, sales presentations too place, and attendees were pressured to make investments or open accounts. Follow up sales calls were then conducted. The seminars took place at upscale locations, such as restaurants, hotels, and golf courses.

• More than half of the 110 firms and offices investigated seemed to provide weak supervision to the employees that were overseeing the seminars. Seminar materials were not reviewed properly.

• Misleading and exaggerated claims were heard at many of the seminars.
• Unsuitable recommendations were found at 23 of the inspections.

Senior investors make up 30% of fraud victims. Since 2005, the SEC has brought more than 40 cases involving senior fraud schemes. FINRA has also filed cases against employees and brokerage firms involved in senior investment scams.

FINRA is also investigating a number of other senior-related areas, including pitches persuading seniors to retire early and cash out their 401(K)’s, high-risk mortgage securities investments, collateralized mortgage obligations sales, and life settlements.

If you are a senior investor-or any kind of investor-that has lost money because you were the victim of an investment scam, contact Shepherd Smith and Edwards. You did not work your entire life to have your retirement pulled from under you. We have helped many investors get their money back.

Your first consultation with us is free. Contact Shepherd Smith and Edwards today.

Probe of Seminar for Seniors Finds Fraud, ABC News, September 10, 2007
Seniors – Beware of Investment Seminars No Free Lunches, SEC.gov