Elderly at High Risk for Stockbroker Fraud

Montgomeryville, PAA study released by the American Association of Retired Persons (AARP), in cooperation with the National Association of Securities Dealers (NASD), has found that senior investors may be more likely to become victims of investment fraud. The report "Understanding Why the Elderly Are Victimized by Economic Fraud Crimes," is a disturbing look into the tactics of our society's most abhorrent scam artists: those who prey on the elderly.

Nearly 1/3 of all U.S. investors are senior investors. Approximately 5 million senior investors are the victims of investment fraud each year.

Research Findings
By examining undercover tapes of fraud pitches, and through surveying non-victims and victims alike, the study made the following determinations:

• Investment fraud perpetrators use different tactics to influence the elderly, including fear, suspicion, friendship, and intimidation.



• Fraudsters study their marks to customize their "sales pitches" to match the victim's personal/family/financial situation and psychological needs.



• Elderly fraud victims tend to have experienced more life difficulties than non-victims.



• Surprisingly, elderly investment fraud victims tend to be more financially literate than non-victims.

Baby Boomers May Be a Prime Target
The study's findings are being looked at as the AARP and NASD develop a new campaign to increase fraud awareness among the elderly, in anticipation of the biggest retirement boom in US history - the baby boomers. The first of the baby boomers (the generation of Americans born between 1946 and 1964) turn 60 this year, and more than 75 million Americans are due to turn 60 during the next 20 years.

Baby boomers have more than $8.5 trillion in assets available for investment, and during the next 40 years will inherit at least $7 trillion from their parents, said Patricia Struck, administrator of the Wisconsin Securities Division, speaking before the US Senate last year.

No Such Thing as a Free Lunch
The government is cracking down of fraudsters through a number of investigative initiatives. For example, regulators in Florida are working with the SEC and NASD to investigate "free lunch" seminars, where seniors can be pressured to invest in scams. These seminars, at hotels and restaurants, typically draw large crowds who are often given the "hard sell" to persuade them to purchase risky or inappropriate financial products, according to Don Saxon, the commissioner of Florida's Office of Financial Regulation.

Seniors Against Fraud
Seniors and advocacy groups are also taking action across the country to crack down on fraud. For example, California's Seniors Against Investment Fraud program is an outreach initiative that provides information on recognizing and preventing investment scams of Californians over the age of 50. It has been adopted as a model for similar programs in Florida, Iowa, Pennsylvania and other states.

Many organizations, including the US securities Exchange Commission and the AARP lead free seminars and have developed web sites with resources to help senior investors, and their children, put the brakes on fraud.

What You Can Do
Whatever your age, if you are an investor who has lost money as the result of careless mistakes or intentional fraud by a stockbrokers or financial adviser, you may be eligible to recover losses through a process known as stockbroker arbitration.

Arbitration claims can involve all types of investments, including stocks, bonds, annuities, and mutual funds.