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Be Wary Of Low-Down, Dirty Swindlers

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The Tampa Tribune

Published: September 23, 2007

In my house, my children know they will receive a harsher punishment for a lie used to cover up a misdeed than for the offense itself.

This also should be the rule for those increasingly popular so-called educational investment seminars or workshops. If these gatherings - often with a free lunch or dinner included - promise that you won't get pitched a product but then the organizers try to sell you something, this should be grounds for double trouble. They should be punished for the lie by losing any chance of doing business with you.

This is an important personal rule you need to implement, because in an examination of 110 investment seminars - many of which had promised participants that nothing would be sold - 100 percent were sales presentations, according to a new joint report by the Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

The finding doesn't surprise me, but the report is yet another reminder that you can never lose sight of the fact that the sponsors of these free lunch or dinner seminars are feeding you for one purpose - to get you to buy something, perhaps not at that meeting but eventually.

Summarizing the results of their study, the federal and state securities regulators said they found everything from misleading or exaggerated claims to outright fraud.

'These findings are a wake-up call for securities regulators, the financial services industry and especially older investors,' SEC Chairman Christopher Cox said during a Seniors Summit held recently at the agency. 'The SEC and our fellow regulators intend to put a stop to this. We will step in whenever false claims are being made. We will sanction crooks who try to feast on the life savings of older investors.'

That's a bold proclamation. I just wish it were so easy.

The regulators are fighting people who are like cockroaches, one of the hardiest pests on Earth. Stamp out one and others appear. Regulators found possible fraudulent practices in 13 percent of the seminars studied.

Here are just a few examples of some of the exaggerated or misleading claims:

•'If you are between the ages of 65-85, join me for the most fascinating hour of your LIFE and I will show you how to immediately earn as much as $100,000, $200,000 or $300,000 ... or more with the stroke of a pen.'

•'Immediately add $100,000 to your net worth.'

Here's another rule: If someone tells you they have a high-return investment for you with no or low risk, it's a low-down dirty lie. With a higher return, there is always higher risk.

'Our examinations prove the point - there's no such thing as a free lunch,' NASAA President Joseph Borg said. 'Only the lowest of the low intentionally seek to deprive retirees of the savings they have worked so hard for so many years to accumulate.'

The Florida Department of Financial Services recently revoked the license of a south Florida insurance agent for selling unsuitable annuity products to senior citizens, some suffering from dementia. One 83-year-old retiree was persuaded to put his entire savings in an equity-indexed annuity that provided no immediate income and carried 13 years of surrender charges as high as 17 percent.

Just guess the percentage of seminars at which regulators found no problems or deficiencies, including no pitches with misleading information?

Only 4 percent of those examined. That leaves you with pretty poor odds of getting solid, helpful and appropriate investment advice. As I've said before, buy your own meal. It's cheaper.

Michelle Singletary can be reached at The Washington Post, 1150 15th St. N.W., Washington, DC 20071.

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