Beware the Free-Lunch Seminar
It’s a demographic fact that retirees have a lot of money sloshing around in their collective pocket. In an effort to obtain a piece of this ever-tempting pie, financial firms and other promoters have increasingly turned to "free-lunch" seminars. Of course, they don’t label them as such. Instead, catchy titles such as "Seniors Financial Survival Seminar," or "Senior Financial Safety Workshop" are the norm. Other times, these seminars are marketed as symposiums or even as panel discussions.
As marketing seminars like these have become increasingly common, the Securities Exchange Commission and other regulatory entities have taken note. Over the past year or so, regulators examined 110 firms that sponsor such seminars. Like a dog whose manners deteriorate at dinner time, these seminar sponsors committed a host of transgressions. Here are a few nuggets:
For starters, 100% of the seminars turned out to be sales presentations in disguise. While some promoters lured attendees with the promise that nothing would be sold, all such events were, in fact, sales pitches of some sort. Attendees at some events were even encouraged to make purchases and open accounts at the seminar, itself. 50% of the seminars featured exaggerated or misleading claims such as "Immediately add $100,000 to your net worth," "How to receive a 13.3% return," or "How $100K can pay 1 Million Dollars to Your Heirs." 23% of these marketing events involved recommendations that may have been unsuitable while 13% appeared to involve at least some element of fraud.
What form might fraud take when one is partaking in complimentary victuals? According to regulatory examiners, it might take the form of material omissions, serious misrepresentations of risk and return, incomplete disclosure of fees, penalties, and other charges, or it might even involve the promotion of fictitious investments.
In some cases, attendees had their existing accounts liquidated – without their knowledge or consent. How might this happen? Since some seminar sponsors encourage attendees to bring their current bank and brokerage statements "for review," participants who oblige put the promoter in a position to see all sorts of sensitive information.
Such sales seminars are frequently held at upscale hotels, restaurants, resorts, and golf courses and are most likely to be offered in areas where there are large concentrations of retirees.
In promising to continue to pursue these criminals, SEC Chairman Christopher Cox couldn’t avoid confirming the notion that free lunches don’t really exist.
