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Self-Directed IRA Investing Could Result in Fraud, Loss of Life Savings
Industry, state securities regulators join forces in investor protection effort
Posted Date: 7/11/2012

FOR IMMEDIATE RELEASE
Contact: Catherine Lu 
             (702) 486-6982 / 334-7953 
             clu@sos.nv.gov  


(Carson City, NV; July 11, 2012) – Secretary of State Ross Miller encourages the public to pick up valuable tips to avoid fraud when considering investing in self-directed Individual Retirement Accounts by attending a free webinar hosted by the Retirement Industry Trust Association (RITA) and the North American Securities Administrators Association (NASAA).

RITA and NASAA are conducting the webinar to help raise public awareness of investor protection. The webinar is open to the public and is scheduled for July 18 at 11 p.m. PST. Registration information is available on the websites of RITA (www.ritaus.org) and NASAA (www.nasaa.org) or at https://attendee.gotowebinar.com/019yq/register/5231648192178625280.

The hour-long webinar will feature Tom W. Anderson, RITA President, founder and Vice Chairman of PENSCO Trust and Matt Kitzi, NASAA Enforcement Section Chair and Missouri Securities Commissioner. The webinar will be moderated by former Texas Securities Commissioner Denise Voigt Crawford.

Among the topics to be discussed are:
• What are self-directed IRA accounts and why are they useful?
• What are the warning signs of investment fraud in self-directed IRAs?
• What should investors do if they suspect fraudulent activity?
• How do securities regulators help protect investors who use self-directed IRA accounts?

A self-directed IRA is an IRA held by a trustee or custodian that allows investments in a broader set of assets than is permitted by most IRA custodians, such as real estate, promissory notes and private placement securities. Because they include alternative assets, the risk and rewards of self-directed IRAs may be greater than those of traditional IRAs.

According to RITA, self-directed IRAs represent about 2 percent, or about $94 billion, of the $4.6 trillion IRA market and are continuing to attract investors at an “explosive” rate.

Along with the industry’s growth, state securities regulators have noticed an increase in investor complaints of fraudulent schemes that use self-directed IRAs. Federal securities regulators also have brought cases in which promoters of fraudulent schemes steered investors to self-directed IRAs. In 2011, NASAA and the Securities and Exchange Commission issued a joint investor alert to caution investors of the potential risks associated with investing through self-directed IRAs.

“Education is the best defense against investment fraud. Self-directed IRAs can provide a safe path toward retirement, but investors need to be aware of the red flags of fraud,” said Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance, Bureau of Securities.

“Self-directed retirement accounts provide important and unique options to help protect and grow your retirement savings through diversification beyond the stock market,” said Anderson. “They are also a critical source of private equity capital and have been used to fund thousands of new businesses in the United States. However, it is important that investors understand the risks, and the methods to prevent and mitigate risk including the threat of fraud. This webinar will tell you what you need to know to reduce the possibility that your retirement account will be impacted by fraud.”

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