SEC Issues Investor Alert on Ponzi Schemes Directed at Seniors

The SEC Office of Investor Advocacy and Retail Strategy Task Force issued an Investor Alert, warning the public that certain Ponzi schemes are targeting senior investors, as demonstrated by two recent enforcement actions (see here and here). The SEC urged seniors to thoroughly review potential sellers before making any investment decisions.

The Alert identified several signs of a potential Ponzi scheme, including: (i) guaranteed high investment returns without high risk, (ii) individuals or firms that are unlicensed and/or unregistered sellers, (iii) promises of consistent returns without fluctuation over time, (iv) aggressive sales strategies pressuring investors to buy immediately, and (v) persuasive sales tactics, like "offering investment seminars with a free meal."

The SEC further encouraged seniors with existing investments to be wary if they encounter difficulties getting paid or pressure to "rollover" investments.