SEC Issues Alert to Federal Employees

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By on August 1, 2017 in Retirement with 0 Comments

Collection of red and white warning signs labeled 'fraud alert'

The Securities and Exchange Commission has issued an alert to current and former federal employees warning about investment scam artists who may pretend to be affiliated with federal agencies.

The warning was directed to the 5 million+ participants in the Thrift Savings Plan along with investors in other federal government retirement plans. It reminds current and former federal employees that federal agencies, including the SEC, do not endorse or sponsor any particular securities, issuers, products, services, professional credentials, firms, or individuals.

In general, fraudsters may try to deceive investors by using the word “federal” or “government” in the name of their company, copying or imitating government emblems or seals, creating fake correspondence that looks like it is from a government agency, or sending email messages that link to an actual government website.

The SEC offers these tips in the event someone offers you an investment opportunity and claims any affiliation with the federal government:

  • Do not trust any contact information or a website provided by someone contacting you with an investment idea when that person claims to be affiliated with the government, the TSP, or government retirement plans.
  • According to the agency that administers the TSP, the TSP will never contact you by email, telephone, or mail asking you to provide sensitive personal information such as your account number, Social Security number, password, or PIN. The TSP will not contact federal employees about investment opportunities and does not authorize third parties to provide counseling or investment-related services to anyone.
  • You can confirm that a seller is not affiliated with a government agency by contacting the agency directly or calling the SEC’s toll-free investor assistance line at (800) 732-0330.
  • Always be cautious about providing personal information to anyone you do not personally know.

The SEC issued the alert in conjunction with news that it had charged four former brokers in the Atlanta area with misleading investors in the TSP in order to get them to roll their funds over to higher-fee, variable annuity products.

According to the allegations made by the SEC, the entity in question, Federal Employee Benefit Counselors, created the false impression that they were in some way affiliated with, or approved by, the federal government and deceived investors about the fees associated with, and the relative attractiveness of, the privately issued annuities.

The SEC alleges the defendants obtained personal information from the federal employees and then sent them reports that misleadingly described the recommended investment option.  The defendants allegedly failed to disclose that this “option” involved investing with a third party that had no government affiliation. (See SEC Charges Former Brokers With Targeting Federal Retirees for details on this story)

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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