Securities Lawyers Blog
There is a need for strong protection of the elderly investing population. About one out of every five Americans 65 years and older has been a victim of financial abuse. The elderly are estimated to lose up to $2.9 billion per year from scams. In fact, these figures are likely lower than the actual incidence of fraud since only reported accounts of frauds are considered and seniors are “less likely” to report being scammed.
Elders are abused by a variety of persons including family members, caregivers, scam artists, financial advisers, fiduciaries (such as agents under power of attorney and guardians), and others. Usually the person is already in a position of trust or is able to acquire a high level of trust due to the diminished capacity of the victim.
Now a new survey of state securities regulators by the North American Securities Administrators Association (NASAA), released on National Senior Citizens Day, shows that more need to be done in order to protect seniors from financial fraud. The NASAA’s polled its members and represents the views of securities regulators who are local state regulators of investment advisors.
The findings include that 97 percent feel that most cases of senior financial fraud go undetected rather than being discovered causing serious problems for seniors.
Brokerage firms and brokers are in the perfect position to recognize the signs elder abuse and elder fraud. Brokers can recognize diminished capacity and dementia, decreased ability to handle finances, questionable purchases or transfers, and the inability of their clients to understand or comprehend their financial assets. As such, when there are reasonable grounds to believe a firm client is being financially exploited the member firm must report potential exploitation to proper authorities and otherwise hold transactions pending review and determination.
Laws and regulations are moving in the direction of requiring those in positions of trust, such as financial advisors, to report financial fraud and abuse. According to the 2013 Nationwide Survey of Mandatory Reporting Requirements for Elderly and/or Vulnerable Persons, all states have passed statutes requiring certain professionals (i.e., attorneys, accountants, doctors, nurses and other health care workers, nursing homes and care providers) to notify law enforcement agencies. Twenty-one (21) states and the District of Columbia require financial institutions to report adhere to reporting requirements. Three states – Iowa, Virginia and Washington – include “financial institutions” among the group of professionals who may report instances of financial abuse, but reporting is permissive, not mandatory.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of investment schemes and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.