On September 10, the Securities and Exchange Commission released a joint report summarizing the results of regulatory examinations of “free lunch” investment seminars for senior citizens.

The SEC, together with the North American Securities Administrators Association and the Financial Industry Regulatory Authority conducted a fourteen month long investigation of these seminars held in seven states with large numbers of retirees. It found widespread misrepresentation, weak supervisory practices and, in some cases, fraud in the presentations of 110 securities firms and branch offices that sponsor such seminars. More specifically, the regulatory agencies found that all such “seminars,” no matter how advertised, were in fact sales presentations and that 59% of such presentations reflected ineffective supervisory practices, including the failure to review seminar presentations or materials in advance. Fully half the “seminars,” featured exaggerated or misleading advertising claims and in 25 of the 110 examinations, examiners found indications that unsuitable recommendations were made. Finally, in 13% of the examinations, the examiners found fraud and have made referrals to the appropriate regulator for possible enforcement or disciplinary action. In these 14 examinations, the regulators found serious misrepresentations of risk and return, possible liquidation of accounts without the customer’s knowledge or consent, and possible sales of fictitious investments.

These investigations are part of a focus, under the current SEC Chairman, Christopher Cox, on frauds targeting retirees and other older investors. During the past two years, the SEC has brought more than 40 enforcement actions in this area, and has sponsored, along with others, educational programs focused on senior citizens. According to Business Week, people 60 and older make up 15% of the country’s population but account for an estimated 30% of fraud victims, and three-quarters of the nation’s consumer financial assets are held by households headed by people 50 or older.