Secretary of State Rokita Unveils Investor Education Initiative
Contact: AJ Freeney-Ruiz
INDIANAPOLIS, Ind. (Feb.16, 2006)— A statewide survey shows that nearly two-thirds of Indiana adults who own financial investments have little or no knowledge about potential fraud schemes or the security of such investments, according to a major analysis conducted by Secretary of State Todd Rokita.
In an effort to combat this lack of investment education among all Hoosiers, Rokita has assembled an industrious plan, including a $1.8 million awareness campaign, to raise understanding and thwart scam artists and perpetrators of fraudulent sales pitches to investors.
More than 1,000 Hoosier families took part in the statewide survey, which was paid for by money received by the state from a multi-billion-dollar, national legal settlement with unscrupulous brokers, investment houses and stock market investment companies.
"We are putting this settlement money to good use," said Rokita. "Hoosiers work extremely hard for their savings, and we need to ensure they are making sound choices, armed with the best information possible."
The program, titled "Indiana Investment Watch," is a broad-based campaign that expects to reach the millions of residents who have investments or may soon be looking for investment opportunities.
A large portion of Hoosiers — 28 percent — said they didn't own any type of investment, raising the question of whether Hoosiers are adequately preparing for retirement.
As expected, identity theft was a top concern of Hoosiers, but other forms of fraud, such as consumer fraud and questionable investment opportunities, were also identified by participants as troubling issues.
"Many people we talked with felt the chances of getting ripped off or being approached with iffy investment offers will greatly increase in the coming years," Rokita added.
Increasing Internet use and the thousands of e-mail offers reaching consumers each day means an increased chance of fraudulent activity, Rokita said. A total of 86 percent of those asked statewide stated that investment offers received by telephone, fax or e-mail run a high risk of being fraudulent.
One of the more striking findings was an apparent knowledge gap on where Hoosiers should turn to get reliable investment information and check on possible scams. A large majority of Hoosiers felt it was the responsibility of state government to provide guidance and information, but they didn't know which office should or would provide such detail.
A total of 24 percent of respondents said they relied on family members or friends to offer investment recommendations, while 36 percent said they spoke with investment professionals for financial advice. Known as "affinity fraud," many people get into questionable investments on the advice of people whom they know and trust.
Similar to national data, participation in 401(k)s, IRAs and the stock market account for a large majority of Hoosier investments.
"We have a considerable job ahead of us," Rokita stated. "It is clear from our research that all segments of our population are subject to investment fraud. Many people believe it is just senior citizens and the poor who are preyed upon by fraudulent operators. But our belief is that the people who are actively making financial transactions, or seeking new investments, are just as likely to become a victim."
Rokita has been airing a series of radio ads throughout the state alerting people to the dangers of fraud. He's also started a series of popular investment workshops for citizens around the state.
Indiana Investment Watch will expand these programs and add print and television advertising to reach more Hoosiers.
"We are going to be out there on the public airwaves and in newspapers, magazines and on the Web this year," he said. "We will be announcing further investment education efforts throughout the year."
For more information on what Hoosiers can do to avoid being bilked out of their money, the Secretary of State's Web site, http://www.sos.in.gov/ offers tips and referral numbers.