Presented by

By Nancy BoudreauxInvestor Education Trainer

Louisiana OOffice of FFinancial IInstitutions

Guard RailsGuard RailsProtecting Your Community Protecting Your Community

From From Investment FraudInvestment Fraud

33A system designed to

keep vehiclesvehicles from straying into dangerous areas

An Action Plan designed to keep investorsinvestors from straying

into dangerous areas

Why listen?Why listen?

NASAANASAA FINRAFINRA IPTIPT

FBIFBI CFPBCFPB AARPAARP

Investor EducationInvestor Education

““Main Street” InvestorsMain Street” Investors

State Securities RegulatorState Securities Regulator

Investment ProfessionalInvestment Professional

Wake up!Wake up!

55+

Wise up!Wise up!

High profitHigh profit

10

Low riskLow riskLiquidLiquid

The “holy trinity” of Investing

11 Weapons of Fraud by Anthony Pratkanis & Doug Shadel

Tricks of the Trade: Outsmarting Investment Fraud DVDJoint venture of FINRA, AARP andwww.saveandinvest.org

Crimes of Crimes of PersuasionPersuasion

MM C C II

ildognitivempairment

Made 44 times more mistakes in financial decisions

*Elder Financial Fraud: A National Epidemic DVD by North American Securities Administrators Association (NASAA), Investor Protection Trust (IPT) and Investor Protection Institute

General cognitive functionsVocabularyGeneral knowledgeADLs (bathing, eating, cooking)

Memory, subtle language difficulties, ability to multi-task BUTBUT

NOT NOT demented

Socially isolated

Made poor investments

Changed his/her will

Reduced ability to make decisions

More willing to “gamble” with their money

IndicatorsIndicatorsOfOf

MCIMCI

Cognitive “Reserve”Protection against

age-related brain changes

*Increases Reserve Higher levels of education Exercise Mediterranean-style diet Complex job Bilingual Large social network

*Reduces ReservePrior head injuryDiabetesHigh blood pressureHigh cholesterol

*Coping With Mild Cognitive Impairment - NYTimes.com 11/27/12

For loved ones with MCI

Sign them up for the DO NOT CALL list Get the deal in writing Get copies of anything they sign Check the registration status of the product and the promoter

before investing Request and read CRD Reports before investing Use the Investor Checklist form for new investments Report suspicions of fraud Stay current on fraudulent scams at

http://www.nasaa.org/investor-education/ Use NASAA’s Conversation Starter for Empty Nesters at

http://www.nasaa.org/2965/conversation-starters-seniors/

Top 5 Top 5 Foggy AreasFoggy Areas

For Fraud For Fraud

Fake “senior” designationsFake “senior” designations

#5#5False or Misleading “Certifications” False or Misleading “Certifications”

Included in free Included in free CRD Reports CRD Reports

#4#4Affinity FraudAffinity Fraud

Join a group, using referrals to sell within the group

● Ethnic ● Social ● Religious

19

Professional sales presentation Personal appointment later

20

PressurePressure

totoBuyBuy

Fraud victims were 33 times more likely to attend

Free?Free?

#3

Free Meal Investment Seminars

Social Networking

“Friend” or Foe?

“Friend” a community leader Pitch the investment later Leader reports profits to their “friends”

Establish friendly rapport with new contact Fake similar Likes & Dislikes; send friendly messages Pitch the investment later

#2Internet

JOBS Act

Raise up to $1M, sold through broker or “portal”

InvestorsInvestorsVery high potential for fraud

Businesses seeking fundingBusinesses seeking funding - could be swindled by unqualified or illegal “portals”

Allows new & small new & small businesses to raise capital from the “online crowd”

Exempt from SEC Exempt from SEC andand state registration state registration

Rules still to be written by SEC; not legal yet

#2 InternetInternet

#1Ponzi Scheme

23

$65 B$65 B

Bernie Madoff, 72, former NASDAQ Commissioner

Swindled victims over 55 continents for decades out of

Sentenced to 150 years 150 years in federal prison

Check up!Check up!

Risky Business

NEVER checked Broker’sregistration with the state

80%80%

70%70%

80%80%

NEVER checked if Broker violated any laws

25

NEVER checked into the Broker’s background

Tricks of the Trade: Outsmarting Investment Fraud

2007 FINRA Fraud Risk Survey

“Are you registeredregistered with the state to sell this security?”

1. Ask why not (take notes)

2. Call OFI to check if the reason is legitimate OR OR to register a complaint

1. Ask for the person’s CRD CRD NumberNumber or Legal name

2. Email a request to complaints@ofi.la.gov

Individual selling the product

May be Exempt from filing with OFI

27

Product (security) being sold

May be Exempt from filing with OFI

What’s Required by Law?

The individual and the product sold are two separate things

28

Register with OFI

Notice-of-Sale filed with OFI

Nothing with OFI

Individual

Product (Offering)

What’s “on record” with OFI?

Note: Exemptions to Registration are available

FREEBackground Checks

C.R.D. ReportsC.R.D. Reports

Securities qualifications

Certifications

Pending arbitration

Criminal history

Bankruptcies 29

Employment History, including:

Terminations

Disciplinary Actions

Customer Complaints

30

For fastest serviceSubmit the person’s CRD NumberCRD Number or legallegal namename

CCRRDD

your request

On Handout

an’tan’tememberememberetailsetails

31

Check upCheck up Wake upWake up Wise upWise up