Investor Education Program Department of Commerce & Consumer Affairs Business Registration Division Commissioner of Securities Office

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program Avoid Being A Victim: Know The Threats That Investors Face Investment Fraud

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Named for the swindler Charles Ponzi, who in the early 1900’s took investors for millions by promising 40% returns. Ponzi Schemes  The premise is simple: pay early investors with money raised from later investors. There is no real underlying business.  Eventually the scheme collapses and the promoters walk away rich.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Con artists are increasingly targeting religious, ethnic, cultural and professional groups by gaining trust and then stealing the savings of members of the group. Affinity Fraud  It is human nature to trust people who are like yourself.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program Remember: “Investigate before you invest – no matter who is selling the product.” Affinity Fraud  In many cases, even the leader becomes a victim of what turns out to be a Ponzi Scheme or some other fraud.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Firms and individuals who provide investment advice are required to pass certain examinations and get registered before they can offer their services to the public.   Hawaii law also requires all brokerages and their sales people to be registered under the securities laws with DCCA Securities Compliance Branch. Unregistered Individuals Selling Securities

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   It pays to remember that legitimate securities investment products not otherwise registered with the federal securities authorities must be registered with state securities authorities before they may be offered for sale to the public. Unregistered Investment Products  Call our Compliance office at (808) to verify if the investment being sold to you is registered.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Regulators are concerned that investors are NOT being told about:   high surrender charges   fees and costs associated with this product   penalties for withdrawals   steep sales commissions that agents often earn when they move investors into variable annuities. Variable Annuity Sales Practices

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Some investors also are misled with claims of guaranteed returns when variable annuities actually are vulnerable to the volatility of the stock market. Variable Annuity Sales Practices

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Some financial professionals use designations that imply that they are experts at helping seniors with financial issues.   They market themselves by putting designations after their names such as “Certified Senior Specialist”, “Senior Advisor” or “Retirement Advisor”.   These designations are NOT recognized by the state. Senior Designations

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program AbbreviationDesignationOrganization 1 CFP Certified Financial Planner International Board of Standards and Practices for Certified Financial Planners, Inc. 2 ChFC Chartered Financial Consultant American College 3 PFS Personal Financial Specialist American Institute of Certified Public Accountants 4 CFA Chartered Financial Analyst Institute of Chartered Financial Analyst 5 CIC Chartered Investment Counselor Investment Counsel Association of American, Inc. These are the only recognized financial expert designations under the state securities laws: Senior Designations

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program AbbreviationDesignationOrganization 1CSACertified Senior Adviser Whatever organization they say they’re with... 2SSSenior Specialist 3SESenior Expert 4RARetirement Adviser The following are not recognized as financial expert designations under the state securities laws: Senior Designations

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Promoters of unsuitable investments are increasingly seeking potential investors, particularly seniors. Investment Seminars  Promoters offer these investments with “higher returns and little or no risk”.  Promoters offer seminars and a “FREE MEAL”.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Con artists use various sales pitches to lure seniors and others into turning over their money to them. Sales Pitches  Salespeople who use these pitches can be a relative or friend.  They use “phrases” to get your attention and to pressure you into acting immediately.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program Avoid Being a Victim  Contact the State Office of the Securities Commissioner to check if the investment product AND the person are registered.  Securities Compliance Branch:  Deal only with financial advisers, broker dealers or financial institutions having a proven track record with State and Federal authorities.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program   Ask for written information on the investment product and the business. Read it carefully! Avoid Being a Victim  Stay clear of investments promoting no downside or risk.

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program DCCA Securities Branches: 1.Regulate Call To check your broker/adviser registration 2.ProtectCall To report securities fraud (Toll Free) Educate Call To request educational information and presentations How We Can Help

State of Hawaii DCCA, Office of the Securities Commissioner – Investor Education Program Contact Information DCCA Office of the Securities Commissioner 335 Merchant Street, Rm 203 Honolulu, HI Office Hours: Mon- Fri/7:45am -4:30pm Website: investing.hawaii.gov To report investment fraud call: or Toll Free