What Constitutes Financial Abuse of the Elderly?
Financial abuse of the elderly occurs any time dishonest individuals steal money or property for their own gain. It may involve anything from taking money from a relative’s purse or wallet to embezzling funds from their investment accounts.
There are seemingly endless ways the elderly can be financially abused. Maybe the person who had power of attorney made a substantial withdrawal from their accounts; or perhaps a company preyed on a senior citizen by overcharging them for a product. Telemarketers may con elders in fraudulent schemes. The list goes on and on. To stop elder financial abuse, first it must be recognized.
Signs of Possible Financial Exploitation of the Elderly
The following occurrences could indicate that an elderly person is being financially abused:
- Fraudulent signatures on financial documents
- Bills going unpaid when the person seemingly has the money to pay them
- Unexpected withdrawals or checks debited from a bank or brokerage account
- Unnecessary expenses that cause the liquidation of securities or withdrawal of funds from an account
- Changing power of attorney or beneficiaries of an account
- Unexpected changes to testamentary documents (e.g., wills, trusts)
- Transactions in a brokerage account when the elderly person has not spoken to their broker
- Purchasing investments which are out of character for the elderly investor
- Loans made by the elderly person to their broker.
If you believe someone is stealing money from you, or an elderly loved one is being abused, you can take steps to stop it. Depending upon the circumstances, you may wish to report the abuse to law enforcement or to the adult protective services organization in your state.
According to a report by the Consumer Financial Protection Bureau about financial exploitation of the elderly, fewer than a third of suspected cases of exploitation are reported to these authorities. Reporting may help prevent further financial losses. An elder financial abuse attorney from our law firm can guide you in the appropriate reporting steps based on your situation and advise you about steps you may be able to take for recovery.
Steps to Take If You Suspect Elder Financial Abuse
If you suspect that you are a victim of elder financial abuse, or if you have a loved one who may have been exploited, we can help you take action. Through FINRA arbitration, you may be able to recover your losses and bring those accountable to justice if the fraud was intentionally committed by a broker or advisor.
Even if brokers or advisors do not commit fraud themselves, they may still be held accountable if they suspected fraud was happening but did nothing to investigate or stop it. Elderly individuals — or their trustees or guardians — can expect to be provided notice of suspicious transactions from banks and brokerage houses. And if elder abuse is not detected until it is too late, they have strong legal rights to take action against financial institutions and brokerages who should have, but failed to, prevent elder financial abuse from occurring.
FINRA Gives Brokers Tools to Stop Fraud
FINRA rules give brokers two tools to respond to situations in which they have a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted or will be attempted. Although broker liability is not explicitly created by FINRA rules, the fact that a broker may place a temporary hold on a suspicious transaction could lead an arbitrator or court to conclude that the broker should have held up a transaction if the facts suggested to a reasonable person that financial exploitation was occurring.
TRUSTED CONTACT PERSON
FINRA Rule 4512 requires brokers to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer’s account or when updating account information for a non-institutional account.
FINRA Rule 2165 permits a broker who reasonably believes that financial exploitation has occurred, is occurring, has been attempted or will be attempted to place a temporary hold on the disbursement of funds or securities from the elderly person’s account.
Get Help from An Elder Financial Abuse Lawyer
In cases where a family member, friend or other individual stole money from you or your loved one, it may be possible to recover money through a civil lawsuit.
Our elder financial abuse lawyers can advise you about the best path to recovery for you based upon your unique situation. Call us today at 800.931.8452 to arrange a free consultation.
Financial Exploitation of the Elderly FAQs
Following are some of the common questions our law firm receives regarding financial exploitation of the elderly. If you have concerns about your specific matter, contact our office directly at 800.931.8452 to set up a free consultation with an experienced elder financial exploitation attorney.
The consequences of financial elder abuse can be dire. Seniors who are financially exploited may lose a lifetime of savings that was intended to help them live comfortably in their later years. Survivors may be impacted by the loss of potential inheritances. Family members, financial advisors, brokers or others who commit the abuse may face prison time, lawsuits, fines, professional license suspensions and other repercussions.
Arbitration is a process in which arbitrators hear the arguments of both sides and decide cases. If your losses due to elder fraud amount to less than $100,000, one arbitrator will hear your case. If your losses exceed $100,000, a panel of three arbitrators will hear the case. The majority of cases involving elder investment losses due to the actions or inactions of brokers or financial advisors are decided in arbitration. This is because most brokerage firms have binding arbitration clauses in their customer agreements.
FINRA arbitration is typically a less formal, less expensive and faster claim process than going to court. The arbitration process can often be resolved in as little as 16 months, whereas a court trial can take years before a decision is made. If the arbitrators deliver a decision that goes in your favor, the broker, advisor or their firm must pay you within 30 days. For this reason, FINRA arbitration is often an excellent option for victims of elder financial abuse. It must be noted, though, that arbitration does not provide the opportunity for an appeal, which makes it all the more important to work with an elder financial abuse attorney with a strong track record of success in recovering money in investment fraud cases. Our attorneys have recovered money for wronged investors in 99% of cases we have handled.
When cases involve financial exploitation of the elderly by family members or other individuals but do not involve binding arbitration, the option of filing a civil lawsuit to try and recover money may be viable. If you are the senior who was exploited, you may file suit. If your loved one who is mentally or physically incapacitated was the victim of elder financial abuse, his or her representative must typically bring the legal claim.
It can be confusing to understand your rights and options in a financial elder abuse case. Our attorneys will answer all of your questions and eradicate the confusion.
Legal Protections from Elder Financial Abuse
With elder financial abuse growing and expected to grow even more as the population ages, federal and state financial regulators have increasingly taken steps to shore up legal protections for elderly victims of financial fraud. Here are some examples of federal and state laws designed to protect seniors from financial exploitation and abuse.
Federal Securities Fraud
At the federal level, the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and Rule 10b-5 protect investors against deceptive and manipulative acts in the purchase or sale of securities. Rule 10b-5 makes it unlawful to employ a device or scheme to defraud, to make any untrue statement of material fact or omit to state a material fact not misleading, or to engage in any practice that would constitute a fraud. Similarly, most states have enacted comprehensive statutes to protect investors, known as “blue sky” laws.
Elderly investors are particularly vulnerable to fraud and misrepresentation. Securities fraud includes a wide range of illegal activities centered around the misrepresentation or omission of information an investor would reasonably want to know and consider before making an investment decision regarding whether to buy, sell or hold a security.
Senior Safe Act
In 2018, the Senior Safe Act was signed into law. The measure was included in a package of financial regulatory reforms. The law incentivizes financial institutions to report suspected elder financial abuse in exchange for immunity from lawsuits claiming violations of bank privacy laws. Immunity is conditioned on bank employees’ enrolling in training programs regarding elder financial exploitation. Nothing in the Senior Safe Act requires financial institutions to report suspected elder financial exploitation, nor does it require enrollment in elder abuse training programs. However, it is possible that widespread adoption of elder financial abuse training programs will create a standard of care that all financial institutions must meet.
Florida Laws Prohibiting Elder Financial Abuse
Nearly every state has a law protecting seniors from financial exploitation. In Florida, for example, a combination of criminal and civil statutes protect elders from financial abuse. Florida’s civil financial exploitation statute, Fla. Stat. § 415.102, provides, in part:
(8)(A) “EXPLOITATION” MEANS A PERSON WHO:
Stands in a position of trust and confidence with a vulnerable adult and knowingly, by deception or intimidation, obtains or uses, or endeavors to obtain or use, a vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive a vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult; or
Knows or should know that the vulnerable adult lacks the capacity to consent, and obtains or uses, or endeavors to obtain or use, the vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive the vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult.
(B) “EXPLOITATION” MAY INCLUDE, BUT IS NOT LIMITED TO:
- Breaches of fiduciary relationships, such as the misuse of a power of attorney or the abuse of guardianship duties, resulting in the unauthorized appropriation, sale, or transfer of property.
- Intentional or negligent failure to effectively use a vulnerable adult’s income and assets for the necessities required for that person’s support and maintenance.
- Unauthorized taking of personal assets.
- Misappropriation, misuse, or transfer of moneys belonging to a vulnerable adult from a personal or joint account.
Florida defines an “elderly person” as a person 60 years of age or older who is suffering from infirmities of aging as manifested by advanced age or organic brain damage, or other physical, mental, or emotional dysfunctioning, to the extent that the ability of the person to provide adequately for the person’s own care or protection is impaired.
Fla. Stat. § 825.101(4) also defines a “vulnerable adult” as a person 18 years or older whose ability to perform normal activities of daily living or to provide for his/her own care or protection is impaired due to a mental, emotional, sensory, long-term physical or developmental disability or dysfunction or brain damage, or the infirmities of aging.
California Laws Prohibiting Elder Financial Abuse
California has equally powerful protections against elder financial abuse. California’s civil remedy for elder financial abuse, California’s Welfare & Institutions Code §§ 15600 – 15675 provides in part:
(a) “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following: (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.
California’s statute protects all people aged 65 and older, without regard to whether they are suffering from a cognitive impairment due to age. Similar to those in Florida, successful complainants are entitled to compensatory damages, punitive damages and attorneys’ fees.
How Brokers Commit Fraud Against Elder Investors
Brokers and financial advisors can and do commit securities fraud against elder investors in many ways, including but not limited to the following:
- Failing to disclose the risks of an investment or strategy.
- Failing to disclose the cost or commission of a transaction at the time of the recommendation.
- Failing to disclose financial interests the financial advisor or their employing brokerage firm may have in the investment being recommended.
- Failing to consider and disclose the relative pros and cons of buying or selling an investment, or pursuing an investment strategy.
- Failing to put the investor’s interests first when recommending to buy, sell or hold an investment.
- Failing to disclose all material facts prior to recommending a transaction.
If you believe you or your elder loved one was a victim of financial abuse by a broker or financial advisor, we may be able to help you get recovery. Reach out to Wolper Law Firm for a free consultation.
Court Decisions Show that Brokers Are Held Accountable for Elder Financial Abuse
Here are two high-dollar cases that show how FINRA holds brokers accountable for investment fraud against senior citizens:
- In Trottier vs. Morgan Stanley Smith Barney LLC, et al., Case. No. 15-02910 (June 9, 2017), a divided FINRA arbitration panel awarded compensatory damages and attorneys’ fees to a woman who withdrew $300,000 from a brokerage account to pay a security system installer. The majority concluded that the broker had enough evidence to reasonably believe that the transaction was fraudulent; he should have blocked the withdrawal and reported the security system installer to the police.
- In Wechsler, et al., vs. Raymond James Financial Services Inc., et al., Case No. 10-04291 (Oct. 4, 2012), a FINRA arbitration panel awarded $800,000 in combined damages, including treble damages, to a woman, individually and as representative of an elderly woman’s estate, for exploitation of an elderly person. The panel ruled two individuals must pay compensatory damages of $270,000 and $265,000 plus interest, respectively. Raymond James Financial Services must pay $265,000, plus interest at the Florida statutory rate.
If you are an elderly person or the loved one of an elder who has been the victim of financial abuse, we will fight for you and/or your loved one.
Contact an Experienced Elder Financial Exploitation Attorney
To learn more about how a qualified elder financial exploitation attorney at Wolper Law Firm can assist you in recovering your losses and holding dishonest parties accountable, schedule a free, confidential consultation so we can learn more about the individual details of your case. Fill out the online contact form provided below or give us a call at 800.931.8452 when you are ready to get started on the path to recovery.
Our law firm has recovered money for wronged investors in 99% of cases we have handled.