Bad Brokers? They're Still Out There
The wolf of Wall Street is still on the prowl, and he has found new ways to fleece retirees.
The Securities and Exchange Commission recently charged operators of two Long Island, N.Y., financial-services firms with scamming investors, many of them seniors, out of more than $10 million. The brokers used high-pressure tactics and false information to persuade victims to buy thinly traded securities in dubious and shady ventures.
Boiler rooms—call centers where sales reps hawk investments—gained notoriety in the 1990s, but they’re just as prevalent today, says Lori Schock, director of the SEC’s Office of Investor Education and Advocacy. Although they still rely heavily on cold calling, crooks have added social media and e-mail to their arsenal of marketing tactics.
The eight-year-long bull market has only made it easier to scam people, Schock says. When coupled with low interest rates, promises of high-earning opportunities can sound too good to pass up, especially for retirees.
If someone pressures you to make an immediate decision, it’s likely a scam. A coId call from someone you don’t know is also a red flag, Schock says. Investors should ask themselves, “If it’s such a great investment, why are they calling me?” Truly great investments, she says, sell themselves.