Beware the 'free lunch' investment workshops
By Michelle Singletary
In my house, my children know they will receive a harsher punishment for a lie used to cover up a misdeed than for the offense itself.
This should also be the rule for those increasingly popular so-called educational investment seminars or workshops. If these gatherings — often with a free lunch or dinner included — promise that you won't get pitched a product but then the organizers try to sell you something, this should be grounds for double trouble. They should be punished for the lie by losing any chance of doing business with you.
This is an important personal rule you need to implement because in an examination of 110 investments seminars — many of which had promised participants that nothing would be sold — 100 percent were sales presentations, according to a new joint report by the Securities and Exchange Commission, Financial Industry Regulatory Authority and the North American Securities Administrators Association.
The findings don't surprise me, but the report is yet another reminder that you can never forget that the sponsors of these free lunch or dinner seminars are feeding you for one purpose — to get you to buy something, perhaps not at that meeting but eventually.
Summarizing the results of their study, the federal and state securities regulators said they found everything from misleading or exaggerated claims to outright fraud. More than a third of the seminars offered unsuitable investment recommendations.
The regulators are fighting people who are like cockroaches, one of the hardiest pests on Earth. Stamp out one and others appear. Regulators found possible fraudulent practices in 13 percent of the seminars studied. And here are just a few examples of some of the exaggerated or misleading claims:
Here's another rule. If someone says they have a high-return investment for you with no or low risk, it's a low-down dirty lie. With a higher return, there is always higher risk.
"Our examinations prove the point — there's no such thing as a free lunch," NASAA President Joseph Borg said. "Only the lowest of the low intentionally seek to deprive retirees of the savings they have worked so hard for so many years to accumulate."
The report details a lot of the lowly tricks used in these seminars. During some seminars, paid pitchmen gave what appeared to be unsolicited testimonials. For example, one broker-dealer hired an elderly gentleman on a part-time basis to attend seminars. He would tell folks he was a current customer of the firm. However, he did not disclose that he was paid to provide the testimonial.
In only 4 percent of the seminars examined did regulators find no problems or deficiencies, including no pitches with misleading information, or fraudulent or inappropriate investments. That leaves you with pretty poor odds of getting solid, helpful and appropriate investment advice.
As I've said before, buy your own meal. It's cheaper.
