SEC Chair Previews Results of “Free Lunch” Seminar Exams

September 06, 2007

During recent testimony before the U.S. Senate’s Special Committee on Aging, United States Securities and Exchange Commission (“SEC”) Chairman Christopher Cox offered a preview of the results from the SEC’s targeted exams of financial firms that sponsor “free lunch” seminars in advance of the full release next week at the SEC’s “Senior Summit”. The following is an excerpt of SEC Chairman Cox’s comments regarding the SEC’s “free lunch” seminar exam findings:

But even at this point it is clear that we were right to identify these “free lunch” sales seminars as posing serious risks to senior investors. Many of the advertisements and mailers used to solicit seniors to attend these events were confusing or misleading about the intent of the event. Our examinations have found that, despite being advertised as “educational” or touting “nothing will be sold,” the purpose of these seminars is to convince attendees to open new accounts with the sponsoring firm – and ultimately, to sell financial products to seniors.

Based on this insight, RIA Compliance Consultants would recommend that financial professionals immediately consider deleting terms and descriptions such as “educational” or “nothing will be sold” from the marketing materials promoting seminars or actual seminar presentations. Moreover, financial professionals that conduct seminars focused upon seniors should carve out time next week to review the complete results of the SEC target examinations of sponsors of “free lunch” seminars since this report will undoubtedly be used as guide by securities regulators for areas of further scrutiny.

If your firm needs guidance with respect to ensuring its sales literature and advertising is in compliance with the requirements of an investment adviser under state or federal law, please contact RIA Compliance Consultants at 877-345-4034.

Posted by Bryan Hill
Labels: Advertising, Equity-Indexed Annuities, SEC