Our nation’s retirees are the largest and fastest growing segment of our population. The statistics tell the story. No fewer than 75 million Americans are due to turn 60 over the next 20 years – that’s more than 10,000 every day.

Households led by people aged 40 or over already own 91% of America’s net worth. The retirement of the baby boomers will mean that, very soon, the vast majority of our nation’s net worth will be in the hands of the newly retired. This is why the SEC, along with other regulators and organizations, has initiated a nation-wide program to fight securities fraud perpetrated against seniors.

We prepared this Guide to provide critical information on how to detect and avoid fraudulent schemes as well as descriptions of scams often directed at seniors.

Our Guide also includes information about investments commonly marketed to seniors, such as variable annuities, promissory notes, and certificates of deposit.

As the materials on the scams themselves suggest, fraudulent schemes come in many flavors. Keep in mind that fraudsters can turn on a dime when it comes to tailoring their pitches to capitalize on the latest trends, from hedge fund investing to charity schemes. But most frauds are not new. Instead, they’re the same old material wrapped up in new packaging. Seniors can use this Guide to help protect themselves from the sometimes tragic consequences resulting from investment fraud and unsuitable investments.

The SEC’s Office of Investor Education and Advocacy (OIEA) is available to help seniors and their caretakers. In addition to our web page devoted to seniors, http://www.sec.gov/investor/seniors.shtml, we have an online complaint center that we encourage seniors to use to report investment scams, http://www.sec.gov/ complaint.shtml.

Investors also can send their written complaints to:
Office of Investor Education and Advocacy
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-0213

We welcome investors with questions or who would like any of our publications to call OIEA at (800) 732-0330.

Download Seniors: Protect Yourself Against Investment Fraud

PDF format, 5.5MB, 112Pages.

A Guide for Seniors prepared by the Office of Investor Education and Advocacy
United States Securities and Exchange Commission

TABLE OF CONTENTS
Introduction ..................................................................................................... i
How to Avoid Fraud
What Can I Do to Avoid Being Scammed? .......................................... 3
Avoid Trouble: Ten Questions to Ask ................................................... 7
Getting Information About a Company ................................................ 8
Types of Fraud and Abuses
Affinity Fraud ....................................................................................... 17
“Ponzi” and Pyramid Schemes .......................................................... 19
Oil and Gas Scams ........................................................................ .....21
Promissory Notes ............................................................................... 22
Prime Bank Fraud ............................................................................... 25
Pump and Dump Schemes ................................................................ 25
High-Return or “Risk-Free” Investments ............................................ 25
Sale and Leaseback Contracts .......................................................... 26
Internet Fraud ..................................................................................... 27
Unscrupulous Tactics of Investment Professionals............................ 30
“Senior” Specialists and Advisers: What You Should Know About
Professional Designations .................................................................. 33
Products to Know About: Is an Investment Right for You ........................... 37
Variable Annuities ............................................................................... 38
Mutual Funds ...................................................................................... 51
Equity-Indexed Annuities .................................................................... 73
Callable CDs or Bonds ....................................................................... 76
Equity-Linked CDs .............................................................................. 81
Ultra-Short Bond Funds...................................................................... 83
Viatical Settlements ............................................................................ 85
Where to Go for Help ................................................................................... 89
SEC Publications and Online Materials ....................................................... 93
Appendix: Telephone Numbers for State Securities Regulators ............... 101

AVOID TROUBLE: TEN QUESTIONS TO ASK

With any investment, whether promoted in person, by mail, telephone, or on the Internet, a wise investor should always slow down, ask questions, and get written information. Take notes so you have a record of what you were told, in case you have a dispute later.

1. Is the investment registered with the SEC and the state securities agency in the state where I live or is it subject to an exemption?

2. Is the person recommending this investment registered with my state securities agency? Is there a record of any complaints about this person?

3. How does this investment match my investment objectives?

4. Where is the company incorporated? Will you send me the latest reports that have been filed on this company?

5. What are the costs to buy, hold, and sell this investment? How easily can I sell?

6. Who is managing the investment? What experience do they have?

7. What is the risk that I could lose the money I invest?

8. What return can I expect on my money? When?

9. How long has the company been in business? Are they making money, and if so, how? What is their product or service? What other companies are in this business?

10. How can I get more information about this investment, such as audited financial statements?

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