ABOUT BROKER FRAUD BLOG

FINRA ANNOUNCES REGULATORY SWEEP ON MEANINGLESS "SENIOR SPECIALIST" DESIGNATIONS USED TO HOODWINK SENIORS

by Lawrence C. Melton, Esq., lmelton@dhayeslaw.com

THE HAYES LAW FIRM, P.C., www.dhayeslaw.com, 1-866-332-3567 toll free

Presented by www.aboutbrokerfraud.com

The latest trend in securities fraud is the meaningless professional title scam, sometimes referred to as the "source credibility" tactic.  Fraudulent Financial Advisers are increasingly obtaining meaningless official-sounding titles in order to trick seniors citizens.  These questionable "professional" titles are often bandied about at "free lunch" seminars where the so-called specialist reviews the seniors investment portfolio.  The self-proclaimed specialist typically recommends liquidating the securities and using the proceeds to purchase indexed or variable annuities products. 

FINRA addressed this issue at the SEC Seniors Summit held on Monday, September 10, 2007.  Mary L. Shapiro, CEO of FINRA announced a regulatory sweep aimed at preventing this all-to-common scam:

"The first sweep is aimed at the use of inflated or meaningless professional titles by advisers who are seeking to lure seniors into thinking they are experts in retirement planning.  The use of so-called professional designations is becoming an increasingly common device used to entice investors to open an account.  The unfortunate trust is that seniors can be susceptible to these tactics.  Our research shows that some seniors are more likely to listen to pitches from people with such designations.  We at FINRA are deeply troubled by this development...."

(Remarks by Mary L. Shapiro, CEO, FINRA, SEC Seniors Summit, September 10, 2007).

This is a touchy subject.  Last time I published a blog on this issue I received polarized response.  The Wisconsin Department of Aging requested permission to republish my article in their newsletter, which I obliged.  By contrast, a representative of Certified Senior Advisers who contacted me was not so impressed.  He objected to my use of the term "phony" and said: "We are very clear--and have the only disclosure statement in the industry that underscores our position--that the CSA designation is a supplement, not a substitute, for a professional's other licenses, credentials and education.  To suggest otherwise is inaccurate."  Nonetheless, organizations such as CSA are currently under investigation by the United States Senate on this very issue. 

Investors, especially senior citizens, need to approach professional designations with extreme skepticism.  These days anyone can call himself an expert.  Obtaining a fancy sounding title is simplicity itself.  Don't be fooled.  Remember, if everyone is an expert, then no one is.  With such a large number of people walking around with professional titles, some of them have to be liars.    

Here is how it works.  A financial adviser working for an insurance company will pay a certain amount of money for a correspondence course to obtain an official sounding title. The course might take a couple of days or maybe a couple of hours. Then the adviser takes an easy multiple choice test and obtains the "professional" title.  But does that make him an expert?  Doubtful.  He probably only took the weekend course to get the title, not the knowledge or expertize.  Why?  Obviously, he wants the title to pull the wool over your eyes.  Don't let him.   

Earlier this year the NASD published NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors.  The Investor Alert classifies and labels the common tactics employed by brokers during a sales pitch. One such tactic is the source credibility tactic.

The Source Credibility Tactic--trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience.  Believe me, as a "certified-registered-senior-financial-retirement-expert-professional-adviser," I would never sell an investment that doesn't produce.

NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors.

The NY Times published an article that provided a list of several of these phony titles to be on the look-out for: Certified Senior Adviser, Certified Elder Planning Specialist, Registered Financial Gerontologist, Certified Retirement Financial Adviser.  (Charles Duhigg, Older Investors Swarmed by Instant Experts, NYtimes.com, 2007).

The Senate Special Committee on Aging is in the process of investigating Old Mutual Financial Network, Allianz Life, American Equity Investment Life Insurance, Society of Certified Senior Advisor's, Piece of Pie Strategic Coaching, and Senior Insurance Training Services.  (Charles Duhigg, Senate Panel Investigates How Insurers Sell to Elderly, July 20, 2007); (Gary S. Mogel, Senate eyes insurer sales to seniors, July 20, 2007).

The financial adviser will use one of the above impressive-sounding titles to trick senior citizens into believing he has credentials and expertise.  In reality the adviser may be an inexperienced novice in this area who simply took a phony on-line correspondence course.  Once the adviser has fooled the senior into believing he is an expert, the adviser will earn big commissions by placing the senior in a bad investment, such as a variable annuity.

As Mrs. Shapiro commented on Monday:

"The unfortunate fact is that some designations can be obtained simply by paying membership dues to an organization with an impressive sounding name.  Too many times these designations mean absolutely nothing.  Seniors put their trust in these individuals and are led down a path of financial ruin."

Remarks by Mary L. Shapiro, CEO, FINRA, SEC Seniors Summit, September 10, 2007.

The NASAA is on the same page.  NASAA President and Wisconsin Securities Administrator Patricia D. Struck said:

"Individuals may call themselves senior specialists to create a false level of comfort among seniors by implying a certain level of training on issues important to the elderly, But the training they receive is often nothing more than marketing and selling techniques targeting the elderly."

Regulators Urge Investors to Carefully Check Credentials of Senior Specialist, NASAA, December 12, 2005.

THE HAYES LAW FIRM, P.C., www.dhayeslaw.com, 1-866-332-3567 toll free

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SENATE INVESTIGATES HOW FINANICAL ADVISERS OBTAIN PHONY OFFICIAL-SOUNDING TITLES IN ORDER TO TRICK SENIOR CITIZENS INTO BAD INVESTMENTS

SENATE SPECIAL COMMITTEE ON AGING INVESTIGATES "SOURCE CREDIBILITY" SCAM AGAINST ELDERLY INVESTORS

by Lawrence C. Melton, Esq., lmelton@dhayeslaw.com

THE HAYES LAW FIRM, www.dhayeslaw.com

(After the initial publication of the following blog, a representative of Certified Senior Advisors contacted me. He objected to my use of the term "phony" and said: "We are very clear--and have the only disclosure statement in the industry that underscores our position--that the CSA designation is a supplement, not a substitute, for a professional's other licenses, credentials and education. To suggest otherwise is inaccurate.")

Yesterday the U.S. Senate opened an investigation of the "source credibility" investment scam perpetrated against senior citizens.  The "source credibility" scam is a growing trend in the securities and insurance industry.  Financial Advisers are obtaining phony official-sounding titles in order to trick seniors citizens. 

(See Charles Duhigg, Senate Panel Investigates How Insurers Sell to Elderly, July 20, 2007)  http://www.nytimes.com/2007/07/20/business/20adviser.html?_r=2&ref=business&oref=slogin&oref=slogin

(See Gary S. Mogel, Senate eyes insurer sales to seniors, July 20, 2007)  http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070720/REG/70720025

Earlier this year the NASD published NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors, which classified and labeled the common tactics employed by brokers during a sales pitch.  One such tactic is the source credibility tactic:

The "Source Credibility" Tactic--trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience.  "Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn't produce."

NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors.

HOW DOES THE SCAM WORK?

STEP ONE:  A financial adviser working for an insurance company will pay a certain amount of money for a correspondence course to obtain an official sounding title.  The course might take a couple of days or maybe a couple of hours.  Then the adviser takes an easy multiple choice test and obtains the phony title.

STEP TWO:  The financial adviser will use one of the above impressive-sounding titles to trick senior citizens into believing he has credentials and expertise.  In reality the adviser may be an inexperienced novice in this area who simply took a phony on-line correspondence course.

STEP THREE:  Once the adviser has fooled the senior into believing he is an expert, the adviser will earn big commissions by placing the senior in a bad investment, such as a deferred variable annuity.

When asked who the most common victim of securities fraud is, attorney Debra Hayes of The Hayes Law Firm said:

"It's typically the elderly, those that are retiring or are retired.  In this day and time, many, many people are retiring at the age of 55 and that's not what we would normally think of as elderly.  However, I would say that the victims tend to be from age 55 and up.  The common sentiment is that people hire a broker that they trust and then they rely on them and accept their recommendations.

Many employees that are retiring meet with a broker that their company chooses.  They're very trusting in that type of a situation and think, "Oh well, my company let this person speak to us, they must know that they're a good person.  They must know what they're talking about."

These brokers are extremely good salesmen, which is what they are, salesmen.  They really are not financial analyst, in my opinion, but they claim they are.  So again, those that fall victim to that the most often are 55 and over, retirees and elderly people."

The Senate Special Committee on Aging is in the process of investigating Old Mutual Financial Network, Allianz Life, American Equity Investment Life Insurance, Society of Certified Senior Advisor's, Piece of Pie Strategic Coaching, and Senior Insurance Training Services. Senate hearings on the subject are expected in September.  (See Charles Duhigg, Senate Panel Investigates How Insurers Sell to Elderly, July 20, 2007) (See Gary S. Mogel, Senate eyes insurer sales to seniors, July 20, 2007).

The "source credibility" occurs when the insurance company rep or the financial adviser tells the client he or she is an expert and then provide a phony official-sounding title.  The NY Times provided a list of several of these phony titles to be on the look-out for:

• Certified Senior Adviser
• Certified Elder Planning Specialist
• Registered Financial Gerontologist
• Certified Retirement Financial Adviser
• Certified Senior Adviser

(See Charles Duhigg, Older Investors Swarmed by "Instant Experts").

THE HAYES LAW FIRM, www.dhayeslaw.com, phone number 1-866-332-3567

 

THE "SOURCE CREDIBILITY" SCAM: FINANCIAL ADVISORS PRETEND TO BE EXPERTS BY USING PHONEY "OFFICIAL" TITLES

SENIORS BEWARE!

by Lawrence C. Melton, Esq., lmelton@dhayeslaw.com

THE HAYES LAW FIRM, www.dhayeslaw.com

(After the initial publication of the following blog, a representative of Certified Senior Advisors contacted me. He objected to my use of the term "phony" and said: "We are very clear--and have the only disclosure statement in the industry that underscores our position--that the CSA designation is a supplement, not a substitute, for a professional's other licenses, credentials and education. To suggest otherwise is inaccurate.")

Last Sunday the New York Times reported a growing trend in the securities and insurance industry.  Financial Advisors are now obtaining phony official-sounding titles in order to trick seniors citizens.  (See Charles Duhigg, Older Investors Swarmed by "Instant Experts").

A financial advisor working for an insurance company will pay a certain amount of money for a correspondence course to obtain an official sounding title.  The course might take a couple of days or maybe a couple of hours.  Then the advisor takes an easy multiple choice test and obtains the phony title.  (See Charles Duhigg, Older Investors Swarmed by "Instant Experts").

Earlier this year the NASD published NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors, available at www.nasd.com.  The benefit of this Investor Alert is that it classifies and labels the common tactics employed by brokers during a sales pitch.  One such tactic is the source credibility tactic:

The "Source Credibility" Tactic--trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience.  "Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn't produce."

NASD Investor Alert: Fraud Fighting 101: Smart Tips for Older Investors.

The NY Times article provided a list of several of these phony titles to be on the look-out for:

Certified Senior Adviser

Certified Elder Planning Specialist

Registered Financial Gerontologist

Certified Retirement Financial Adviser

Certified Senior Adviser

(See Charles Duhigg, Older Investors Swarmed by "Instant Experts").

The financial advisor will use one of the above impressive-sounding titles to trick senior citizens into believing he has creditials and expertise.  In reality the advisor may be an inexperienced novice in this area who simply took a phoney on-line correspondence course.

Once the advisor has fooled the senior into believing he is an expert, the advisor will earn big commissions by placing the senior in a bad investment, such as a variable annuity.

When asked who the most common victim of securities fraud is, attorney Debra Hayes of The Hayes Law Firm said:

"It's typically the elderly, those that are retiring or are retired.  In this day and time, many, many people are retiring at the age of 55 and that's not what we would normally think of as elderly.  However, I would say that the victims tend to be from age 55 and up.  The common sentiment is that people hire a broker that they trust and then they rely on them and accept their recommendations.

Many employees that are retiring meet with a broker that their company chooses.  They're very trusting in that type of a situation and think, "Oh well, my company let this person speak to us, they must know that they're a good person.  They must know what they're talking about."

These brokers are extremely good salesmen, which is what they are, salesmen.  They really are not financial analyst, in my opinion, but they claim they are.  So again, those that fall victim to that the most often are 55 and over, retirees and elderly people."

      

If you have been the victim of securities fraud call THE HAYES LAW FIRM at 1-866-332-3567, and visit www.dhayeslaw.com email author of blog at lmelton@dhayeslaw.com BlogRankings.com