Federal and state regulators have had their say and now Congress may be stepping in to adopt measures aimed at eliminating investment fraud against seniors. Senators Robert Casey [D-PA] and Herb Kohl [D-WI] introduced legislation in the U.S. Senate on June 27, 2008 that would enhance penalties for federal securities law violations involving conduct that targets senior investors.
In particular, the Senior Investor Protections Enhancement Act of 2008 (S.3219) would add a $50,000 civil fine for each federal securities law violation that is “primarily directed toward, targets, or is committed against” a senior. The bill defines “senior” as an individual 62 years old or older. This is the age at which most retirement savings become available for use and investment.
If enacted, S.3219 may enhance the likelihood of private and/or SEC litigation under the federal securities laws. As introduced, S.3219 creates a “special rule for seniors” in the civil action, willful violation and other violation sections of four federal securities laws. The bill also requires the Federal Sentencing Commission to review and amend the federal sentencing guidelines and policy statements to ensure that securities law violations involving conduct against seniors are appropriately punished. The legislation follows hearings held by the U.S. Senate Special Committee on Aging in September 2007 to examine some of the questionable practices used by “senior financial investment specialists” to gain access to retirement savings of senior citizens.
Earlier this year, Senator Kohl also introduced the Senior Investor Protection Act of 2008 (S.2794), which seeks to protect older Americans from fraudulent marketing practices, with the goal of increasing retirement security. S.2794 directs the U.S. Attorney General to establish a program of grants to states to investigate and prosecute fraudulent marketing practices, or develop educational materials and training aimed at reducing fraudulent marketing of financial products toward seniors.
S.3219 was referred to the Senate Committee on Banking, Housing and Urban Affairs. S.2794 was referred to the Senate Judiciary Committee. At this time, there are no companion bills pending in the House of Representatives.