SEC, NASAA and FINRA Issue Warnings to Investors on Self-directed IRAs

The SEC Office of Investor Education and Advocacy, NASAA and FINRA issued a new investor alert on the risks associated with self-directed Individual Retirement Accounts ("IRAs").

In the alert, the agencies cautioned that self-directed IRAs allow for investments in a broader portfolio of assets, including real estate, private placements, precious metals and crypto assets, each of which poses risks to investors.

The agencies focused specifically on the risks posed by self-directed IRA promoters and investments in novel crypto assets. The agencies said that self-directed IRA promoters may not be licensed investment professionals and may not be subject to the same regulatory requirements and urged investors to avoid unsolicited investment offers. The agencies also said that using a legitimate custodian to buy an investment does not legitimize the investment, and urged investors to ask questions and be wary of suspicious performance claims. Additionally, the agencies warned that investments in crypto assets may pose additional risks due to the unregulated nature of the investment and the institutions that offer such products.

The agencies urged self-directed IRA investors to verify the information presented in self-directed IRA account statements and to consult a professional if necessary.