Securities Bulletin

              SECURITIES bulletin
The fall 2007 Securities Bulletin warned about the
dangers of “Free Lunch” seminars directed at sen-iors
and to be cautious of anyone using the title
“senior specialist.” A senior designation confers an
impression that a salesperson has special qualifica-tions
or specialized education in addressing the
needs of seniors or retirees, particularly in the
areas of financial planning, estate planning or
investing. However, requirements for these desig-nations
vary widely, as does the process for moni-toring
compliance with the code of ethics, if any,
of the various organizations that confer such des-ignations.
The North American Securities Administrators
Association recently issued a new model rule that
addresses the inappropriate use of senior certifi-cations
and professional designations. NASAA’s
model rule prohibits the misleading use of senior
and retiree designations while providing a means
for securities regulators to recognize certain des-ignations
conferred by accredited organizations.
My office will implement the model rule this sum-mer
to fit current Illinois Securities Department
rules and regulations. The proposed rule will be
posted at www.cyberdriveillinois.com. Please take
a moment to familiarize yourself with the pro-posed
rule and send any comments to the
Securities Department.
Jesse White
Secretary of State
SUMMER 2008
Secretary of State Jesse White announced that Illinois is joining eight
other states in conducting investigations involving the sale of auction-rate
securities. The nine-state task force is coordinating efforts to help
investors who cannot access funds that their brokers placed in these
complex investment products.
Illinois securities regulators have been investigating auction-rate securi-ties
complaints since late February. Investigations center on sales prac-tices
and supervisory issues related to auction-rate securities, often pro-moted
as being similar to cash deposits or money market accounts.
However, because of the tight credit market stemming from the sub-prime
mortgage crisis, many auctions where the securities are traded
have failed. As a result, many investors are finding they are unable to
access their money. The focus of the investigations is to determine what
conduct took place at the point of sale — what was potentially misrep-resented
and omitted — with the goal of securing for investors access
to their cash as requested.
“These investors’ lives have been detrimentally affected because the
money they thought was liquid is now tied up in this frozen market,”
said Secretary of State Jesse White. “Based on investor complaints, it
appears to be a pervasive problem.”
Complaints have a common theme. Investors say they did not know
their money was being held in auction-rate securities and were not
advised of the liquidity risks. The complaints have come from a wide
range of investors, including young families saving for a home, small
business owners and retirees.
Illinois joins investigation of
auction-rate securities
IN
THIS
ISSUE
• IL JOINS INVESTIGATION OF AUCTION-RATE SECURITIES •
• CASE RESULTS IN 330-YEAR PRISON SENTENCE •
• INVESTMENT ADVISER RECORDS REQUIREMENTS •
• ADMINISTRATIVE ENFORCEMENT ORDERS •
• BROKER-DEALER BRANCH OFFICES • WEB SITE UPDATES •
A NEWSLETTER OF THE ILLINOIS SECURITIES DEPARTMENT • SECRETARY OF STATE JESSE WHITE
Investor Education summer outreach
The Securities Department’s Investor Education Division is out and
about this summer. Division staff will be on hand at the following
events to talk with visitors and distribute investor education materi-als.
If you have a group or organization looking for speakers, or a
conference or festival, please contact the Securities Department at
800-628-7937.
• Taste of Chicago — June 27-July 6
• Illinois State Fair in Springfield — August 8-17
• DuQuoin State Fair — August 23-September 1
• Pekin Marigold Festival — September 6-7