It seems like not a day goes by that we’re not warned to beware of schemes from telephone callers, mail that invites you to a free lunch, or even guys in suits who ring your front doorbell. No doubt you’ve heard the admonitions before, especially as they pertain to some person trying to sell you securities or maybe a “great” real estate investment.
The warnings might sound something like this: Watch out for the con man, the scam artist, the guy who’s out to rip you off. There are other carefully worded labels, but you get the point.
So, with all the warnings, what do you get? It seems that many of you are getting just that –– conned, scammed, ripped off, or whatever else you’d care to call it.
“I’m shocked by the degree of fraud in investments. Now, that’s my own personal opinion, as a result of my own findings,” said Michael O’Callaghan, enforcement chief in the Securities Division of the Nevada Secretary of State’s office.
O’Callaghan, a retired deputy district attorney and criminal prosecutor, also told an audience of some 200 in Sun City Summerlin to beware of “anyone who says we’ll guarantee you 10 percent or 12 percent. Forget it. Those days are gone.”
Bonnie Moore, chief compliance audit investigator in the Securities Division, added that if you have any doubts about who’s trying to sell you on any investment, “our investigators can tell you who’s licensed.”
Here’s how you can find out whether the person trying to sell you some investment is licensed, or the security they’re trying to sell you is registered. Contact the office of Secretary of State Ross Miller, Securities Division, at nvsos.gov/securities. In Las Vegas, call 702-486-2440.
But the same program also included a couple of well-informed women from Washington, D.C. They flew in especially to add their emphasis to the urgency of the problem of investment fraud. One was Geraldine Walsh, president of the Financial Industry Regulatory Authority Education Foundation, and the other was Lori Schock, director of the Securities and Exchange Commission Office of Investor Education and Advocacy.
The program, sponsored by the Sun City Investment Club, was a two-hour information session on how to protect yourself against fast-talkers looking to sell you investments. Although it was presented in Sun City Summerlin, and again two days later in Sun City Anthem, the program was not confined to senior citizens.
FINRA is an independent regulatory organization with the backing of the federal government, aimed at protecting all investors. Walsh urged that consumers beware of “the phantom riches, the ones that guarantee you a 10 percent return. Yeah? Today you can’t get 1 percent.” And as for fast-talkers, “their credibility can be faked.”
Schock warned that although “seniors are often the target of fraud,” con artists and scammers come in all sizes and shapes, and everyone is susceptible. An SEC guide says, “Seniors are particularly vulnerable to tactics of scam artists who are ‘nice’ or attempt to develop a false bond of friendship.”
But that doesn’t exclude other consumers who are equally vulnerable to a telephonic sales pitch or a free lunch or dinner in some fine restaurant.
The basic reason investment fraud thrives is this, says the SEC guide: “Fraudsters rely on the fact that many people simply do not bother to investigate before they invest.”
Certainly there are many honest and well-intentioned stockbrokers and other professionals out there. Still, it all comes down to what you can do to guard against scammers. The panelists hit the high point when they explained how everyone can protect themselves from being ripped off by crooks selling phony investments.
Walsh put it most succinctly when she said, “Simply find out if the seller is licensed and find out if the investment is registered.”
To accomplish that, you can do the FINRA broker check on your computer by punching into saveandinvest.org, or calling, toll-free, 888-295-7422.
In the alternative, to research investments, you can contact the SEC, toll-free, at 800-732-0330, or go online at investor.gov. Interesting enough, the first message you’ll see when you go online at the SEC is, “Learn how to recognize scams and avoid fraud.”
Herb Jaffe was an op-ed columnist and investigative reporter for most of his 39 years at the Star-Ledger of Newark, N.J. His newest novel, “All For Nothing,” is now available. Contact him at firstname.lastname@example.org.