Self-directed IRA scams on the rise, state securities regulators warn


In separate comments to ThinkAdvisor, Lubin said that “as a next step, Congress should use its monitoring and investigative tools to gather additional information on SDIRA so that lawmakers and regulators can better understand the scope of the problem and assess proposals to strengthen the regulatory framework. . “

For example, Lubin continued, Congress, through the Government Accountability Office, “should collect information from regulators who work collectively to protect owners of SDIRA,” which includes the Securities and Exchange Commission, bank regulators. federal and state, Internal Revenue Service and state. securities administrators.

“Speaking on behalf of NASAA, I know we look forward to participating in a GAO interview and / or providing testimony to Congress regarding this important issue for investors across the United States,” Lubin said.

Precious metals, for example, are an example of a type of investment that can be placed in a self-directed IRA, just like real estate, Borg said. “But the trust company created as a custodian doesn’t have a duty to say to you, ‘Oh, by the way, the people you deal with have four or five government orders against them. “”

The bottom line: People who open a self-directed IRA take “all risk,” Borg said. “There isn’t really any real control. That could change in the future as NASAA as a group talks with trust companies….

NASAA, Borg continued, is in dialogue with the Association of Trust Companies and others in the market to say, “’Bought this.

Bad actors also take advantage of technology to drive their projects, said Joe Rotunda, director of the enforcement division of the Texas State Securities Board.

When it comes to digital assets and social media scams, state securities regulators have reported 125 investigations this year, up from 67 investigations in 2019.


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