It’s easy to check the background of investment advisers

WASHINGTON — Before you eat at a new restaurant you probably go online to look at reviews, right?

Want to see the latest movie? It’s likely you’ll check what your favorite film critic has to say about it.

But you know what? Many people never check the credentials of the investment representative they are trusting with hundreds of thousands of dollars of their hard-earned money, says Lori Schock, investor education director for the Securities and Exchange Commission.

In many cases, had investors used a free and simple search tool at the SEC’s investor.gov, they would have found out they were not dealing with a legit investment professional.

So to combat investment fraud, the SEC has put together a public service campaign to help steer people to its background search site. The pilot campaign, which includes print ads, television and radio spots and a blitz of social media sites, costs $1.375 million but could save investors millions more.

The amount of money lost to fraud each year is unknown, but experts say it’s high. Schock notes that some studies have estimated that people lose $50 billion a year to financial fraud.

The SEC’s “Before You Invest, Investor.gov” campaign is slick and smart. I love the television ad. It starts out with a dapperly dressed guy in his driveway standing next to a Maserati.

“This car came courtesy of James and Patricia Thompson,” he says.

He heads into his posh home — with a swimming pool — and turns on the big screen television in his living room. “This TV, Margaret and Tom Lee.”

In a nod to March Madness, he walks past a number of basketballs on display and points out a championship game ball also purchased courtesy of an investor. He says, “That was Sebastian Diaz. Good guy.”

There’s something so slimy when he calls out the names of the people funding his fantastic life. You can’t help but imagine the poor investors who trusted him.

“All I had to do is ask for their money and pretend I was investing it. Their life savings is now my lifestyle,” the guy says, turning to toss a basketball into a hoop on his large basketball court.

He makes the shot, by the way. And I see that as a metaphor for how he easily scores against naive investors.

And then comes the slam-dunk in the voiceover: “Don’t let someone else live the life you’ve been saving for.”

You can find the television and radio ads at investor.gov. Click on the link for “Outreach.” Please watch and listen. Then share it with everyone you know.

Last week, the SEC announced fraud charges against an unregistered fund manager with a criminal past. The agency said the man took more than $1 million in unauthorized withdrawals from client accounts. Neither the so-called adviser nor the funds he was selling were registered with the SEC or any state regulator.

In another case this year, the SEC charged an unregistered broker in California with fraudulently selling stock in a medical device company. This guy was able to raise about $1.9 million from more than 100 investors. Instead of purchasing the stocks, he paid his gambling debts and made other personal expenditures, the SEC alleges.

The print ad for the campaign is running in AARP’s magazine. The television ad was placed on CNBC and CBS sports channels, the latter to attract March Madness followers with the basketball theme. The radio ad is running in the District of Columbia and nine other cities — Chicago, Dallas, Las Vegas, Minneapolis, Orlando, Philadelphia, Phoenix, Pittsburgh and St. Louis.

“These public service announcements make the SEC’s mission to protect investors come alive by providing investors with important information they need to protect themselves from investment fraud,” said SEC Chair Mary Jo White. “Many SEC cases involving retail investor fraud could have been avoided with a simple background check on the Investment Adviser Public Disclosure website.”

When you go to investor.gov, you can search for a firm or an individual investment adviser’s registration status and background, including any disciplinary actions. The investor.gov site provides one-stop searching because it also includes FINRA’s BrokerCheck database.

Schock’s analogy of the not-as-important things people investigate, like movies and restaurants, is profound. Yet, she said, “they turn over their life savings to someone they never check out.”

Believe me, folks, checking these investors’ backgrounds on investor.gov is just as easy as searching for a movie or restaurant review.

Save yourself from a scam and a lot of heartache.