Senior Investor Protections Enhancement Act Introduced in the Senate

By Kim Deng

Individuals who attempt to take advantage of older investors (ages 65 and better) would face stiffer penalties under the Senior Investor Protections Enhancement Act. This bill was introduced to the Senate on June 27, 2008 by U.S. Senators Robert P. Casey (D-PA) and Herbert H. Kohl (D-WI), and is currently being reviewed in committee before it is voted upon.

“Many seniors are discovering that their life savings may not be enough to last them throughout their retirement,” said Kohl. “As they turn to investments to bridge the gap, seniors need to know that they can trust the people who handle their money.”

Americans over the age of 65 control an estimated $15 trillion in assets. Consequently, many are targeted by salespersons without proper credentials, whose limited expertise are of no value in advising older adults on financial matters. Some have lost their life savings due to advisors steering them towards unsuitable products.

Under the Senior Investor Protections Enhancement Act, penalties for existing securities violations could include an additional $50,000 civil fine for each violation that is primarily directed toward, or is committed against, an older adult. Violations could include selling them products that are unsuitable for their age, failing to disclose fees, lock-ups of cash or large penalty charges, or switching investments sold with the one marketed. However, the bill would not interfere with legitimate investment advisors who recommend products and investments appropriate for their customers.

According to a recent North American Securities Administrators Association (NASAA) survey, 28% of all investor complaints submitted to state securities agencies came from older adults; 26% of all state enforcement actions involved the financial exploitation of older adults; and 34% of all cases of senior exploitation involved variable or equity index annuities.

NASAA President Karen Tyler fully supports the bill, stating “NASAA believes the Casey/Kohl legislation will assist law enforcement and regulators to ensure that those who take advantage of our nation’s elderly will be held accountable.”

While there is no guarantee that this bill will be turned into law, it is an important attempt to address fraud against older adults.

You can access more information about the bill at http://www.govtrack.us.

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