Look carefully at schemes for early retirement

SCAM WATCH

April 27, 2008|By DAN THANH DANG

Afraid swindlers might ruin your plans for early retirement? The Financial Industry Regulatory Authority (FINRA) is recommending that employers and older workers check out two online resources developed to protect you from scam artists who try to lure you into cashing retirement investments early, with misleading promises of big financial returns and comfy retirement lifestyles that can't be sustained.

The financial education effort was launched after two recent enforcement actions taken against early-retirement scams. Last year, Citigroup Global Markets was ordered to pay over $15 million to settle charges relating to the use of misleading materials in retirement seminars and meetings for BellSouth employees in North Carolina and South Carolina. Securities America Inc. was fined $2.5 million and ordered to pay $13.8 million in restitution for an investment scheme aimed at Exxon retirees.

"Companies offer retirement benefits to help employees lay the groundwork for financial independence when they leave the workplace," said FINRA chief executive Mary L. Schapiro, who was recently appointed to the President's Advisory Council on Financial Literacy. "While many third-party seminars offer solid information, others - especially those that promote early retirement - may not be appropriate. Some seminars include misleading assumptions about investment returns, suggest risky withdrawal strategies, or lead to outright fraud."

Two resources from FINRA, the largest nongovernmental regulator for all securities firms doing business in the United States, to help you avoid getting duped are:

*Help Your Employees Achieve Their Retirement Dream: Tips for Spotting Early Retirement Scams, which teaches you how to evaluate financial professionals and seminar materials such as invitations, slides, handouts and scripts.

*Early Retirement Seminars 101: Smart Tips for Spotting Retirement Scams points out pitfalls of schemes.

The Society for Human Resources Management, the world's largest association devoted to human resource management, has made the two FINRA resources available on its Web site at www.SHRM.org/financialliteracy. You can also find them at www.finra.org/investor.

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