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Bernard Madoff, founder of Bernard L. Madoff Investment Securities, leaves federal court in New York on Tuesday, March 10, 2009.
Since the arrest of former investment advisor Bernie Madoff for fraud 10 years ago, many protections for investors have been put in place. But those putting money into the market shouldn’t let their guard down and assume they’re completely protected by the Securities and Exchange Commission and other regulatory agencies.
Scammers will always find a way to get to their targets. Just when the dust settles on one financial crisis or scam, another one pops up. And, during times of heavy market volatility such as the one the market has been experiencing recently, the risk of being targeted by a scammer is high.
Why? Don’t investors run for cover during volatility, meaning they’d find a safe place to hide?
“Market volatility is very unnerving, especially for people who are relying upon their returns,” consumer protection expert Bill Francavilla told CNBC. That’s when emotion kicks in. “It puts people in a position where they make bad decisions.”
And con artists always target the vulnerable, said Francavilla, who is also the author of “The Madoffs Among Us” and once served as corporate director of wealth management at Legg Mason.
Older Americans can be particularly susceptible to fraud, especially since they may be at or past the peak of their wealth accumulation. According to a study conducted by The Wharton School’s Pension Research Council, nearly 5 percent of people over 50 reported at least one form of investment fraud. The study was based on the responses of 1,268 randomly selected participants, age 50 and older.