The new U.S. self-regulatory organization, the Financial Industry Regulatory Authority, announced that it is undertaking two new major regulatory sweeps intended to ensure that securities firms are using appropriate sales practices in their dealings with seniors and individuals nearing retirement.

The first new sweep will examine whether brokers are using so-called “professional” designations to mislead and defraud investors. FINRA says it is concerned about the proliferation of professional designations, particularly those that require no meaningful training or specialized knowledge but suggest an expertise in retirement planning or financial services for seniors. The SRO says that the sweep also will help inform possible rulemaking on the use of designations.

In the other new sweep, FINRA will be looking at early retirement seminars conducted by securities firms designed to entice older workers to liquidate their retirement funds and invest them with a specific firm or representative.

FINRA CEO Mary Schapiro announced the sweeps at the Securities and Exchange Commission’s Senior Summit in Washington, D.C. “Our research shows that almost one in five seniors who lost money on an investment attribute that loss to being misled or defrauded,” said Schapiro. “This concern is real — and confronting it will require a focused regulatory effort that includes vigorous regulatory examination and enforcement programs and investor education.”

The SRO currently has two other regulatory sweeps ongoing in the area of protecting seniors: one examining the sale of collateralized mortgage obligations targeted at seniors; and a second focused on the sale of life settlements. FINRA recently completed another regulatory sweep, conducted jointly with the SEC and state regulators, into the sales tactics used at “free lunch” seminars.

The regulator reports that since January 2005, it has completed approximately 100 formal disciplinary actions involving or related to seniors. It also has about 70 open investigations that involve seniors.

To address the risks to near-retirees, FINRA is also launching a new campaign aimed at informing human resource professionals and unions about the risks of flawed or even fraudulent early retirement seminars.

FINRA notes that it has also issued a regulatory notice to the industry that informs firms and brokers about their obligation under securities rules when selling products to seniors. The notice outlines best practices in areas ranging from suitability to acceptable use of professional designations that firms can use when dealing with senior customers. It also highlights key issues relevant to most senior investors, including managing retirement assets, evolving investment objectives and, in some cases, increased vulnerability to abusive or fraudulent sales practices.