State Securities Regulators Announce New Model Rule on the Use of Senior Certifications and Professional Designations

NASAA Also Voices Strong Support for the ‘Senior Protection Act of 2008’ and Applauds Sen. Herb Kohl’s Leadership in the Fight Against Senior Investment Fraud

WASHINGTON, D.C. April 1, 2008—The North American Securities Administrators Association (NASAA) today announced that its membership has approved a new model rule prohibiting the misleading use of senior and retiree designations, a problem first spotlighted by state securities regulators and now the subject of federal legislation.

“We detected a growing problem for senior investors and have responded to it aggressively with a regulatory solution. I urge all NASAA members to adopt this model rule within their jurisdictions as soon as possible,” said Karen Tyler, North Dakota Securities Commissioner and President of NASAA, the oldest international organization devoted to investor protection. NASAA’s membership consists of the securities administrators in the 50 states, the District of Columbia, the U.S. Virgin Islands, Canada, Mexico and Puerto Rico.

The model rule prohibits the misleading use of senior and retiree designations while also providing a means by which a securities administrator may recognize the use of certain designations conferred by an accredited organization.

Tyler said NASAA’s Model Rule on the Use of Senior-Specific Certifications and Professional Designations represents the culmination of an effort NASAA and its members launched in 2003 to focus national attention on unscrupulous behavior targeting senior investors. The proposed rule, developed by the NASAA Task Force on Senior Designations, was released for public comment in November 2007.

“Through a process informed by member and public comment, the Task Force produced a model rule that will provide state securities regulators with an effective weapon in the fight against senior investment fraud,” Tyler said.

Securities and Exchange Commission Chairman Christopher Cox said: “The SEC worked closely with state securities regulators in developing this model rule to protect seniors. Fraud against seniors robs dreams, destroys lives, and erodes the very trust on which our markets depend. This national approach to senior designations at the state level will make it easier for honest firms to help their aging customers, while making it harder for fraudsters to rob our parents and grandparents of their financial security.”

The model rule addresses the growing use of financial designations or certifications that ostensibly convey expertise in advising seniors and retirees. “Investors often have insufficient information when trying to determine whether so-called ‘senior designations’ represent meaningful educational achievement by the salesperson, or are merely marketing tools,” said Task Force Chair and Maryland Securities Commissioner Melanie Lubin.

The use of a senior designation by salespersons, whether registered or not, confers an impression that the salesperson has special qualifications or specialized education in addressing the needs of senior citizens or retirees, particular areas of finance, financial planning, estate planning, or investing. “The requirements to obtain designations and certifications vary greatly, as can the processes for monitoring compliance with a code of conduct or ethics, if any, adopted by the organization that awards the designation or certification,” Lubin said.

“The use of senior designations that misleadingly imply expertise in the financial needs of seniors often results in unsuitable investments being sold to unsuspecting seniors by apparent ‘experts’ who are little more than salespersons with little or no expertise in the individual, specific needs of the senior client or understanding of the product being sold,” Tyler said.

Tyler said NASAA appreciates the dedicated efforts of Sen. Herb Kohl (D-WI), chair of the Senate Special Committee on Aging, to protect senior investors and strongly supports the “Senior Protection Act of 2008,” which was introduced today by Sen. Kohl and Sen. David Vitter (R-LA). The legislation would provide grants to states to enhance the protection of seniors from being misled by false designations.

“This significant legislation would provide states with additional resources to protect seniors from being harmed by financial salespeople who place their interest in generating sales commissions ahead of the best interests of the senior investor,” Tyler said.

The grants would be available to states to support a wide variety of senior investor protection efforts, whether by hiring additional staff to investigate and prosecute cases involving misleading or fraudulent marketing of financial products to seniors; funding new technology, equipment and training for regulators, prosecutors, and law enforcement in order to identify salespersons and advisers who target seniors through the use of misleading designations; or providing educational materials to increase awareness and understanding of designations.

Download:
NASAA Model Rule on the Use of Senior-Specific Certifications and Professional Designations

For More Information
Bob Webster, Director of Communications
202-737-0900

2008 Headlines, Newsroom, Senior News & Alerts