Government Regulators “Hungry” for Senior “Free Lunches”

Red Flag Reminder #101 - 4/24/06 - If “free lunch” senior seminars are part of your marketing effort, watch out.   Federal and state regulators are cracking down on seminars targeting Florida seniors.  And this initiative may expand to other states as part of a broad effort to shut down inappropriate sales practices in the senior marketplace.

According to SEC Chairman Christopher Cox, the SEC, NASD, and Florida Office of Financial Regulation will conduct on-site exams of brokers and investment advisors who conduct senior seminars.  Their goal:  to bring action against advisors who aren’t properly licensed or who misrepresent their offerings.

Officials say they’re concerned about financial professionals using seminars to sell unsuitable investments.  They are also concerned about securities-licensed advisors using unapproved sales materials or misrepresenting or omitting material facts.

If you do a lot of seminars, be extra careful in the current regulatory environment. Don’t assume you’re safe because you don’t operate in Florida.  Whenever you sell in a public forum, you can become a lightning rod for complaints.  An attendee may misinterpret an innocent statement and file a complaint with your state insurance or securities department.  Next thing you know, a government examiner will be knocking at your door—and it won’t be for lunch.

Red flags?  If you aren’t securities licensed, don’t advise seminar attendees to get out of securities and into annuities.  If you are securities licensed, your broker-dealer must approve your materials.  And whatever your license, always call a spade a spade.  An annuity is an insurance product, not an investment.