Investor Alert: Tips to Avoiding Fraud for Senior Investors

Posted on August 5th, 2016 at 2:54 PM
Investor Alert: Tips to Avoiding Fraud for Senior Investors

From the Desk of Jim Eccleston at Eccleston Law LLC:

The SEC’s Office of Investor Education and Advocacy is warning that older Americans are more often than others the targets of investment fraud. Accordingly, that office has issued an Updated Investor Alert in order to assist seniors in identifying signs of investment fraud and helping to prevent the occurrence in the first place. 

They have identified 5 “red flag” areas as a simple basis for assessing the legitimacy of any investment adviser. Let’s discuss those areas.

Unregistered and Unlicensed Sellers                                                                 

            Before making any investment decisions, it is important to check whether the person selling a product is a registered or licensed seller, even if you know them personally. Many of the frauds targeted at older investors originate from persons who are unlicensed and/or unregistered. Even if a person is registered or licensed, checking for their registration may help to uncover past fraud or wrongdoing as well. Resources to help in this process include:

  • free online database to research your investment professional
  • FINRA’s for researching registered persons
  • Contact your state securities regulator

Promises of High Returns

            Purported investment opportunities that guarantee high returns with little or no risk are classic warning signs of fraud. Every type of investment product comes with some degree of risk, and usually those investments that have the highest returns also have correspondingly high risk. Avoid becoming involved with the “can’t miss” or “guaranteed returns” investments. Remember, if it sounds too good to be true, it probably is.

Pressure to Buy too Quickly

            Reputable investment professionals should always know better than to push someone into making an immediate decision about an investment, or tell you that you must “act now.” The proper investment professional should encourage you to do independent research and take your time so that you are very comfortable making your investment decisions.

Free Meals

            Always be wary of “free lunch” seminars, info sessions, or presentations. The objective of most free meal programs is to lure potential clients and to sell investment products rather than to simply educate the public. If you want to take advantage of a free-meal seminar for educational pruposes, make sure you commit yourself not to purchasing anything or opening any accounts during or as a result of the seminar. Even if you do not experience high-pressure sales tactics during the event, expect that the ‘hard-sell’ will come with subsequent communication from the person selling the investment product.

Red Flags in the Financial Professional’s Background

            When you have researched an investment professional and his/her good standing with regulators, be sure to thoroughly research the professionals past as well. SEC, FINRA, and state regulators all keep records of every investment professionals past that can be used in order to identify red flags for investors. When evaluating an investment professional’s past be sure to look for:

  • Employment at firms that have been expelled from the securities industry
  • Personal bankruptcy
  • Termination
  • Being subject to internal review by an employer
  • A high number of customer complaints
  • Failed industry qualification examinations
  • Federal tax liens
  • Repeatedly moving firms

Hopefully, by following the SEC’s advice, older investors will not become victims of investment fraud.

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, Eccleston Law LLC, James Eccleston

Return to Archive



Thank you for your professional assistance with this matter. You are very good at what you do.

John T.


September 23, 2022
CFP Board Lifts Interim Suspension of Former UBS Advisor

The Certified Financial Planner Board of Standards (CFP Board) has lifted an interim suspension it had imposed against a former UBS advisor after criminal fraud charges against him were recently dismissed.

September 22, 2022
FINRA Penalizes Baird Over $100 Trading Commissions

The Financial Industry Regulatory Authority (FINRA) has ordered Robert W. Baird & Co. to pay $461,481 plus interest due to allegations that the firm overcharged its clients on thousands of equity transactions for at least one year.

September 21, 2022
FINRA Arbitrators Award Nearly $470,000 To Investors in UBS YES Product

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered UBS to pay nearly $470,000 to clients who invested in a complex options strategy, known as the YES or Yield Enhancement Strategy.