In the past year, the Department of Defense has kept up its “war” against bogus financial advisers in an effort to protect military members that are wanting to invest. Last September, state insurance regulators were given one year to cooperate with the Secretary of Defense in developing strategies to protect armed forces members from “dishonest and predatory insurance sales practices while on a military installation of the United States.”
The yearlong deadline was part of a new federal law created to protect soldiers and other members of the armed forces from shady financial advisers. To date, 14 states have been in compliance with the legislation. 16 more states are expected to follow by the end of 2007.
The law is called the Military Personnel Financial Services Protection Act. It also requires the Secretary of Defense to maintain a list of advisers (along with their contact information) that have been banned, barred, or restricted from military bases because they engaged in the dishonest selling of investment products at these sites. The first listing of agents was published last May.
The law was created after a flurry of news reports in 2005 talked about how certain investors were selling high-cost securities and life insurance policies to military personnel.
John Oxendine, the state insurance commissioner for the state of Georgia, says that soldiers have always been targets of crooked financial advisers during times of war. He cited soldiers’ lack of experience about financial matters, their youth, and their naiveté as reasons for why they were prime targets for shady advisers.
Oxendine says that under Georgia’s law, passed in August, insurance agents and companies must show how an investment product is suitable for junior soldiers. Certain products, including automatic premium payment provisions, are banned. Georgia’s law has also adopted the Defense Department’s solicitation rules. Financial adviser solicitation in a day room, barrack, or other restricted area is now a “deceptive trade practice.”
A draft report detailing the progress of this “war” is slated to be presented to the U.S. Congress by the Department of Defense’s inspector general in early October.
If you have been a victim of investment fraud, there are legal remedies at your disposal that can allow you to file a claim to get your money back. Shepherd Smith and Edwards is an experienced securities litigation firm that has helped thousands of people recoup their losses.
Contact Shepherd Smith and Edwards today and ask to speak with one of our securities litigation attorneys.
Pentagon on to ‘bad’ advisers, Investment News, September 17, 2007
Military Personnel Financial Services Protection Act, Veteransresources.org
Personal Commercial Solicitation Report, Department of Defense