How the Government Protects Investors

Video Transcript

Kelly Kesner: I’m Kelly Kesner with another class at Investor’s Watchdog University. Our goal here is to help you protect yourself through a very dangerous landscape. And I’m here with Pat Huddleston, who’s the founder of Investor’s Watchdog and the author of The Vigilant Investor. Hi, Pat.
Pat Huddleston: Hey, Kelly. Good to be with you.
Kelly Kesner: So, we’re talking about investing landscape that’s very, very dangerous.
Pat Huddleston: It is. Yeah. And only getting more so. The North American Security Administrators Association says that fraud targeting people over the age of 50 has doubled and so what you’re seeing is that the biggest generation in history is at more risk than they have ever been, so just getting worse and worse.
Kelly Kesner: We’re going to cover about one subject per video. We’re going to try to keep them short and we’re going to start with investment scams.
Pat Huddleston: Well, we are. And we’re going to move on from investment scams and found out exactly why we do fall for them. A lot of people think that it’s gullibility, or greed, or low intelligence, but what we find out, Kelly, is that it’s just the way our brains are wired. We come pretty wired to fall for this stuff to some extent and you can see that that’s true because it’s not just the uneducated who wind up losing money to these things. Huge investors, pension plans, college endowments, institutional investors lose money to the same kinds of scams that target blue-collar retirees.
Kelly Kesner: And besides from just scams we’re going to be talking about different kinds of investment misconduct. Talking about stockbrokers, or investment advisors, and what you can do to protect yourself against those kinds of misconduct or different violations that they may fail.
Pat Huddleston: Absolutely. No, we will see common violations. We will see that there is a current wave of putting investors in alternative investments and that that could be dangerous to folks. We’ll take a look at some of the sales tactics that these brokers use with a particular focus on the dangers to baby boomers and to elderly parents perhaps.
Kelly Kesner: Yeah. We’re going to be specifically addressing those two particulars groups because they seem to be a target right now.
Pat Huddleston: That’s absolutely right. Yeah.
Kelly Kesner: Didn’t you say the statistics are swayed that there are so many baby boomers nowadays?
Pat Huddleston: Well, 10,000 turning 65 every single day. Yeah, that’s a lot.
Kelly Kesner: So, we’re going to help you come up with information or at least have some techniques to help protect either yourselves, your parents, or elderly investors against some of these problems.
Pat Huddleston: Well, that’s right. And people may react to this by saying, “Hey, wait a minute. I thought the government was supposed to protect me. Where’s the FCC in all of this?” And unfortunately we hear that a lot and we just think it suggests a fundamental misunderstanding about what the regulators are and what they’re supposed to do.
Kelly Kesner: So, people can’t default to, “Is the FCC protecting me?” Or, “It’s safe because the FCC is out there.”
Pat Huddleston: No, they can’t really because regulators are severely understaffed and underfunded, but even if they had all the funding in the world, they still wouldn’t be able to protect you in the way that you’re talking about. Now, you and I live in Atlanta, Kelly, I’ll ask you, any crime in Atlanta?
Kelly Kesner: Sure. Of course.
Pat Huddleston: Yeah, does that mean that the cops aren’t doing their job?
Kelly Kesner: Of course not.
Pat Huddleston: No, they’re in the business of stopping crime in progress if they see it and bringing people to justice, right? But, people look at the FCC and they say, “Hey, the FCC must not be doing their job. There are a lot of investment scams out there.” I try to get people to think about the FCC like they would a police detective. They’re there to bring violators to justice and that does a lot of good because the scam may shut down today, can’t take anybody’s nest egg tomorrow, but they can’t ever possibly stop them from starting up in the first place.
Kelly Kesner: So, basically an investor should treat this as walking down a dark alley, being protective, trying to avoid doing that or getting into dangerous situations.
Pat Huddleston: That’s a great way to say it. Yeah. People have been acting like they’re walking down a spring meadow when in fact they’ve been the whole time walking down a dark alley.
Kelly Kesner: Well, it sounds like it’s going to be a great class and full of good information. And that’s just an overview of what you have to look forward to. We’ll see you next week. Until then class dismissed.

[Music Playing]
[End of Audio]