Christopher Cox, chairman of the Securities and Exchange Commission, the SEC, understands firsthand the issues seniors and their family members face in separating investing opportunities from investing scams. In this exclusive interview he explains how his elderly parents were barraged with sales ploys. And he clarifies how the SEC fulfills one of its missions: to ensure that all investors are protected as they plan and save for retirement.
At a glance
Newport Beach, Calif.
- Became 28th chairman of the SEC on Aug. 3, 2005.
- Chairman of the Homeland Security Committee in the U.S. House of Representatives, 2001-2005.
- Chairman of the House Policy Committee, fourth-ranking leadership post behind the Speaker of the House, 1995-2004.
- Senior associate counsel to President Ronald Reagan (1986-1988).
- Partner, international law firm of Latham & Watkins.
- Founder, Context Corporation.
- Graduate of Harvard Business School and Harvard Law School; editor of the Harvard Law Review.
Senior citizens are victimized by investment scams disproportionately to their population size. In fact, even you had experiences with scammers in dealing with your own parents' finances. Can you tell us about that?
Like many Americans, I've had to look after my parents' finances. Before my mother died a few years ago, she was pestered by a seemingly endless barrage of annuity schemes and unsuitable mortgage offers. Despite the fact that she was suffering from throat cancer and could barely speak, she received unsolicited sales pitches over the phone and even in person. Even though my father was suffering from Alzheimer's disease, the brokers would prey upon him as well.
The products these brokers were pushing weren't just unsuitable, but affirmatively harmful to anyone in my parents' circumstances. The annuity products locked up their modest savings with huge penalties. I particularly remember one persistent salesman who more than a dozen times pestered my mother to refinance her safe, low-rate 30-year mortgage with a short-term loan that had a balloon and a teaser rate. That would have cost my parents their home when it came due. Even though I personally warned him never to call her again, he continued.
Both in Congress and since I've become chairman of the SEC, I've heard hundreds of similar stories from constituents and colleagues. It is heartbreaking to see a loved one ripped off by semilegal but underhanded tactics. That's why, at the Commission, we're always doing our best to protect everyone as if they're our own mother or relative.
Our investor education hot line is (800) 732-0330, and our Web site, especially for seniors, family members and caregivers, is www.sec.gov/investor.shtml. These are great resources where anyone can quickly check whether a securities broker or financial adviser is registered with the SEC, and whether he or she is complaint-free insofar as the regulators are concerned.
Why do perpetrators of fraud seem to be increasingly targeting senior citizens specifically?
The reason that protecting senior citizens from securities fraud is becoming so critical is this: With the baby boomers reaching retirement age, the ranks of older Americans are beginning to swell as never before. What's more, this is happening at the same time that Americans are living far longer than ever before.
More than 10,000 Americans are turning 60 every day. And that trend will continue for the next 20 years. That's the population of one midsized town after another turning 60 every 24 hours, without interruption, for an entire generation.
This unprecedented large number of older Americans will live significantly longer than their parents -- and longer than they planned. Very few will have sufficient retirement plans to last the extra decade or more that they will live. Those that are blessed with good health will probably need to continue working, at least part-time. And many of them will seek to actively manage their investments for higher returns, instead of switching into low-yield, safe investments like the retirees of yesteryear. That will make them prime targets for scam artists and securities swindlers.