Smith Exposes Rise in Senior Investment Fraud

September 04, 2007

OREGON U.S. SENATOR
GORDON SMITH

PRESS RELEASE: September 4, 2007
CONTACT: KIMBERLY COLLINS, (202) 224-5364

Smith Exposes Rise in Senior Investment Fraud
Senator Smith listens to a witness during a recent hearing of the Special Committee on Aging

- Washington, DC - Unscrupulous practices used by investment advisors to target seniors were under investigation today by the Senate Special Committee on Aging. Senator Gordon H. Smith (R-OR), the committee'is Ranking Member, revealed information obtained from the Federal Trade Commission (FTC) that showed investment fraud complaints to account for approximately $100 million dollars lost in 2006 alone. The FTC report also showed that investment scams in areas such as annuity fraud skyrocketed from $35 million in 2005 to $85 million in 2006.

`iThere is no shortage of smooth talking conmen willing to flash dubious credentials and take money away from seniors to line their own pockets,^i said Senator Smith. `iWhile I do not want to discourage Americans from saving and investing for their future, we have a clear deficiency in our ability to combat investment scams and other types of financial fraud and abuse. We need increased oversight and transparency in investment transactions to stop these bad actors before our seniors'i hard-earned money pays for another swindler'is Ferrari.^i

The committee focused on the legitimacy of professional designations and credentials often used to gain seniors'i trust and unfettered access to their personal finances. As part of the investigation, Senator Smith had one of his staff sit for the Certified Senior Advisor (CSA) designation exam administered by the Society of Certified Senior Advisors. Senator Smith expressed his concern that this staff member, an attorney with no financial services background or experience, received a high-level passing score on the exam with only 1 hour of study.

Senator Smith noted that combating investment fraud must be addressed on multiple fronts, such as increased sales agent oversight, transparency in investment transactions, encouraging investment and bolstering financial literacy. Senator Smith is the sponsor of numerous pieces of legislation, such as the Women'is Retirement Security Act of 2007, to encourage Americans to securely save and invest in their retirement years. Senator Smith is also developing legislation with his Democratic colleagues on the Finance Committee to improve financial literacy among older Americans. The bill would provide grants to Area Agencies on Aging to provide financial literacy services to seniors.
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