Cracking Down on Financial Scams Targeting the Elderly (USA)

Laws Take On Financial Scams Against Seniors

States Increase the Penalties When Victims Are Elderly; Is Special Protection Needed?

MAY 19, 2009

By JENNIFER LEVITZ

Fed up with purported financial advisers preying on unwitting older people, investigators from the Arkansas Securities Department last year staged an undercover sweep of one of the hucksters' favorite showcases -- free lunch seminars.

The Arkansas sweep triggered several investigations of financial firms that are still under way. It also uncovered enough in the way of shady practices -- misleading claims, underplayed risk -- to prompt legislative action. This spring, Arkansas legislators passed a law, effective July 1, that doubles the civil penalties for financial securities violations when the victim is 65 or older. Though the state securities department can't bring criminal complaints, it can refer such cases to the attorney general's office.

Arkansas is one of a number of states that are passing or amending securities and criminal laws to impose "enhanced penalties" on people who commit financial crimes against seniors. Similar legislation is expected to be proposed in Congress next month by Democratic Sens. Bob Casey of Pennsylvania and Herb Kohl of Wisconsin, chairman of the Senate Special Committee on Aging.

Preying On the Elderly

Financial scams that target seniors are on the rise, and states are cracking down.

•          The recession has spurred more scams that play off people's fear of stocks.
  
•          Some investments pitched as low-risk could instead be quite complex.
  
•          Regulators are sending sleuths to monitor free-lunch seminars, and some new state laws boost penalties for scams against older people.
  

"If you target an older person in Michigan, we're going to target you," says Ken Ross, commissioner of the Office of Financial and Insurance Regulation for the state, which also has passed legislation protecting the elderly.

Pending State Laws

Besides Arkansas and Michigan, Idaho also passed a senior-victim law in recent months that will go into effect this year. Six other states, including Maryland, Minnesota, Missouri, New Jersey, Rhode Island and West Virginia, have similar bills pending in their current legislative session.

Abridged

SOURCE:    Wall Street Journal - USA

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