The Securities and Exchange Commission is warning federal employees to beware of a scam involving the Thrift Savings Plan and other government employee retirement plans.

SEC recently brought suit against four former Atlanta-area stock brokers for running a scam that induced federal workers to roll over their TSP holdings into higher-fee, variable annuity products.

In light of that action, SEC issued an alert to government employees, cautioning them to beware of similar cons. Some 5 million people participating in TSPs could be vulnerable to “investment scam artists” pretending to be affiliated with a government agency, SEC warned.

There have been other recent incidents of con artists preying on government workers. This spring OPM warned of “an aggressive marketing push” in which predatory companies were offering a cash payment in exchange for future annuity payments. The payouts offered were “generally much less than their long-term worth, and typically charging high-interest rates and fees.”

The SEC advisory offered specific advice to potential victims:

  • Do not trust any contact information or a website provided by someone contacting you with an investment idea when that person claims to be affiliated with the government, the TSP, or government retirement plans.
  • The TSP will never contact you by email, telephone or mail asking you to provide sensitive personal information such as your account number, Social Security number, password or PIN.
  • You can confirm that a seller is not affiliated with a government agency by contacting the agency directly or calling the SEC’s toll-free investor assistance line at (800) 732-0330.
  • Always be cautious about providing personal information to anyone you do not personally know.

In the case of the Atlanta brokers, SEC alleges the group Federal Employee Benefit Counselors gave people the false impression that they were “in some way affiliated with, or approved by, the federal government,” which was not the case.

The suit claims the brokers got personal information from the federal workers, “and then sent them reports that misleadingly described the recommended investment option.” The brokers never told their victims that this offering involved a third party with no government affiliation.

OPM has repeated the warning on its blog. It warns that scam artists will use words like “federal” or “government” in the name of their company, or may create bogus correspondence that looks as if it comes from a government agency.

Share:
In Other News
Load More