Released: July 18, 2006

SEC eyes elderly free lunch scams

Source: By Kevin Drawbaugh, Reuters

Forty investment firms across America’s Sun Belt are under federal examination over so-called “free lunch” investment seminars that target elderly victims, authorities said on Monday.

In six states with large retiree populations, the Securities and Exchange Commission is looking hard at seminars where seniors get a free meal and a hard sell for investments that can range from inappropriate to fraudulent.

“Regulators are now examining 40 firms and more firms have been identified for examinations,” said Lori Richards, director of the SEC’s Office of Compliance Inspections and Examinations at a conference on senior fraud. She did not name the firms.

At the conference, a study was released with a finding that surprised some officials—elderly victims of investment fraud seem to be more financially literate than non-victims.

The finding in the study sponsored by markets watchdog NASD led to suggestions that financial education needs to cover more than market mechanics and include teaching about scam tactics.

From verbal bullying to impersonating authority figures and playing on feelings of insecurity or greed, swindlers use a range of techniques to part seniors from their money.

“The reason people victimize seniors is because that’s where the money is,” said Linda Thomsen, director of the SEC’s Division of Enforcement at the conference.

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