The Wall Street Journal reports that fed up with purported financial advisers preying on unwitting older people, some states are passing or amending securities and criminal laws to impose “enhanced penalties” on people who commit financial crimes against seniors.
In Laws Take On Financial Scams Against Seniors, Jennifer Levitz writes that investigators from the Arkansas Securities Department last year staged an undercover sweep of one of what they call “hucksters” favorite showcases — free lunch seminars.
The investigations uncovered enoughshady practices and lead to legislators passing 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.
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.
"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.
Such laws, however, have drawn criticism from some legal experts who oppose singling out seniors for protection. These critics say the laws amount to reverse discrimination by implying that older people aren’t sophisticated enough to keep from being taken in by sales pitches.
I love the quote from Jonathan Macey, deputy dean of Yale Law School, who adds that an enhanced penalty law regarding seniors isn’t illegal or unconstitutional, but "I think it’s just stupid. There are all kinds of vulnerable groups in society, like poorly educated recent immigrants, et cetera. The bad guys will just target them."
This isn’t the first time “free lunches” for seniors has come under fire. AARP is working with regulators and its members by establishing Free Lunch Seminar Monitors. According to AARP’s website, volunteers are asked to attend seminars and fill out a checklist to help assure that free investment seminars adhere to the guidelines set by financial regulators.
"Every rock that we turned over seemed to have a bug or a worm crawling out underneath," says former SEC Chairman Christopher Cox. "In each of the sweeps we conducted, we found significant fraud."