Tuesday, September 30, 2008
FOR IMMEDIATE RELEASE:
DFI Cautions Investors: Make Sure Your Decisions Amid The Current Wall Street Crisis Are Informed And Researched
OLYMPIA – The Washington State Department of Financial Institution’s Securities Division urges Washington State investors to make informed decisions about their long-term financial holdings and to seek the advice of a trusted investment adviser or financial planner before making any sudden moves with their money, particularly during the ongoing market volatility and unprecedented turmoil on Wall Street. Director of Securities Michael Stevenson also reminds investors about the important safeguards protecting their brokerage account assets.
“We know from past experience that con artists follow the headlines to prey on the worries and fears of everyday investors,” Stevenson warns. “With the current economic situation, state securities regulators are concerned that scammers are gearing up to promote various investment schemes with promises of big returns. If history is any guide, these investments will be worth less than the paper on which they are printed.”
“Investors should be wary of unsolicited financial advice or investment opportunities,” Stevenson says. “In times of confusion, fear and uncertainty, there are always those who will try to prey on the investing public. Investors should resist the temptation to make hasty decisions about their investments or finances.”
The Dept. of Financial Institutions offers the following tips for investors:
- Contact the state Securities Division with any questions about an investment firm, professional or product. Make sure that both the seller and investment are licensed and registered. If they are not, they may be operating illegally.
- Use common sense. Some things really are too good to be true. Get a professional, trusted third-party opinion when presented with investment opportunities that seem to offer unusually high returns in comparison to other investment options.
- Request written information that fully explains the investment, such as a prospectus or offering circular. The documentation should contain enough clear and accurate information to allow you or your financial adviser to evaluate and verify the particulars of the investment.
- If you participate in an employer-sponsored retirement plan, such as a 401(k) plan, get unbiased advice and guidance before making any significant changes to your long-term savings and investment strategy.
The Dept. of Financial Institutions also reminds investors that the Securities Investor Protection Corporation (SIPC) maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms. SIPC acts either as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. Additional information about SIPC is available at www.sipc.org.
Moreover, rules of the U.S. Securities and Exchange Commission require registered broker-dealers to maintain net capital to provide financial resources so that customers will get their cash and securities back if the firm fails. According to the SEC, customer claims for their funds and securities are senior to other claims on the broker-dealer.
www.dfi.wa.gov ▪ 360.902.8700 ▪ 877.746.4334 ▪ En Espaņol 877.976.4422
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the DFI’s Web site features consumer tips on a variety of financial fraud-related topics.
www.dfi.wa.gov/sd ▪ 360.902.8760
The mission statement of the Securities Division is: "To protect the investing public and promote confidence in the capital markets."
This mission is accomplished through a variety of regulatory and enforcement tools, including:
- Reviewing securities, franchises, and business opportunity offerings;
- Licensing and examining Broker/Dealers, Investment Advisers, and their representatives;
- Providing technical assistance to small business;
- Responding to customer complaints, investigating and bringing appropriate administrative, civil and criminal cases; and
- Providing information and investor education.
DFI’s Securities Division is a member of the North American Securities Administrators Association, the oldest international organization devoted to investor protection. NASAA’ s membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces and territories of Canada, and Mexico.
Contact information for other regulators is available on the North American Securities Administrators (NASAA) Web site, www.nasaa.org.