Text Resize

-A +A
Bookmark and Share

DISB Adopts Rules Protecting Seniors from Deceptive Financial Advisory Credentials

Monday, August 23, 2010

DISB Adopts Rules Protecting Seniors from Deceptive Financial Advisory Credentials

"Residents need to be especially wary of financial-service salespersons seeking a marketing edge over competitors by falsely claiming to be specially qualified to assist seniors in financial matters,” said Commissioner Purcell.

(Washington, DC) — Commissioner Gennet Purcell, Esq., of the DC Department of Insurance, Securities and Banking (DISB) today announced the adoption of rules intended to prohibit the use of misleading or bogus credentials that point toward special certification or training in advising seniors or retirees on life insurance, annuities and securities investments. [Chapter 58, Title 26A and Section 169 of chapter 1, Title 26B, DC Municipal Regulations]

The new rules prohibit the use of credentials, certifications and designations that:

  • Are claimed by persons who are ineligible or unqualified;
  • Are self-conferred;
  • Are issued by a non-existent or fictitious organizations;
  • Imply a level of experience, training or education that the person does not have;
  • Are issued by a firm primarily engaged in sales instruction; and
  • Are issued by a firm that does not have reasonable standards for assuring the competence of its credentialed or certified persons.

A population study published in June by the Data Center of the District of Columbia reflected that 11.7 percent (70,184) of the city’s population is 65 and older.

“In view of this potentially large number of prospective clients here in the District, residents need to be especially wary of financial-service salespersons seeking a marketing edge over competitors by falsely claiming to be specially qualified to assist seniors in financial matters,” said Commissioner Purcell. “Bogus senior specialists commonly target seniors and victims through investment seminars and misleading designations.”

Generally, it may be difficult to determine whether senior designations reflect meaningful qualifications or are merely a marketing tool. A helpful site for checking credentials is http://apps.finra.org/DataDirectory/1/prodesignations.aspx. Another useful site concerning registered investment advisers can be found at the US Securities and Exchange Commission at www.sec.gov.

The apparent widespread abuse of credentials by investment advisers who prey upon seniors was cited in the recently enacted Wall Street Reform and Consumer Protection Act, which was signed into law July 21, 2010, by President Barack Obama. A study by the Investor Protection Trust showed that roughly one out of five seniors has been victimized by financial fraud. See survey in DISB’s online newsroom, EIFFE Survey Report. Furthermore, a project group of the North American Securities Administrators Association has observed a significant increase in designations that create the appearance that the holder of the designation has expertise in matters of particular interest to senior investors. Because of the widespread concern by regulators, some 23 states, including Virginia and Maryland, have adopted similar regulations designed to curb misleading credentials.

For more information on senior designations, contact DISB by calling (202) 727-8000 or visit its website at www.disb.dc.gov.