Elder Financial Abuse & Exploitation Attorneys

Updated: October 2023

Seniors Are Considered a Soft Target for the Unscrupulous Financial Advisor

Seniors may have managed to accumulate a healthy nest egg resulting from a lifetime of saving. Seniors may also be a tempting target for elder financial abuse due to poor health, age related diminished capacity, dementia, or Alzheimer’s.

Over the years we have seen numerous cases where a financial advisor, stockbroker takes advantage of a senior citizen in order to maximize revenue for the advisor and his firm.

Interesting Facts from a recent AARP article on Fraud by a Fiduciary:

  • The amount of losses reported to state and federal authorities annually due to elder is about $4.8 billion. Since many, if not most incidents go unreported, the actual amount is likely significantly greater.
  • According to the federal Consumer Financial Protection Bureau 7% of reported cases of elder financial exploitation involve a fiduciary- an attorney, financial professional or trustee tasked with managing a senior’s finances.
  • The average loss is $86,300

FINRA RULES 2165 and 4512

FINRA RULE 2165 Financial Exploitation of Specified Adults- provides protection for those over 65 and those who a broker believes has a mental or physical impairment that renders the individual unable to protect his or her interests. Permits a temporary hold on disbursements or transactions under certain circumstances.

FINRA Rule 4512 Customer Account Information – requires a broker to obtain the name of and contact information for a trusted contact person over the age of 18 who may be contacted about the customer’s account.

Warning Signs of Financial Exploitation by Financial Advisor

  • CHURNING: This is excessive trading in the account and is evidenced by numerous trade confirms being received by the account holder. In addition the monthly statement may contain noticeably more pages due to the trading.
  • OVERCONCENTRATION: Is there an excessively large percentage of the account in a single stock or single sector? This is an unsuitable way to allocate the account of the elderly since it exposes the account to risk should the general market or a particular sector of the market have downturn.
  • UNAUTHORIZED WITHDRAWALS: Make sure to account for all withdrawals from the account. We have seen cases where the advisor seizes upon the opportunity to take advantage on a customer with diminished capacity and divert funds from the account.
  • LOAN TO FINANCIAL ADVISOR: Has the broker asked you to loan money? We have seen situations where the broker tempts the elderly customer to loan him money personally. This is prohibited by the policies of virtually all the broker dealers.
  • RISKY INVESTMENTS: Private placements, non publicly traded real estate investment trusts (REITs), oil and gas investments, exchange traded funds (ETFs) are generally not suitable for the elderly who cannot afford to lose capital. Unfortunately unscrupulous advisors may take advantage of the elderly so that the advisor can reap the benefits of the high commissions generally associated with these products.
  • BROKER AVOIDANCE BEHAVIOR: In virtually every situation we have seen over the years where there is a problem communicating with the broker, there is trouble. If the broker is not returning phone calls, responding to emails or otherwise trying to avoid the senior, you need to dig deeper and talk to the office manager or supervisor.

Elder Financial Abuse Case Example: A Case We Handled

True Story: A while back we received a call from a 90+ year old widow residing in South Florida who was concerned because she was receiving lots of trade confirms from her broker (who worked for a large well known national firm). She thought something was wrong so she and her nurse who drove her there, took a stack of confirms to the broker’s office to question him about it.

The broker explained that this was a computer error, told our client not to be concerned and then tore up the stack of confirms and tossed them in the trash. Unconvinced by the explanation, the following day our client attempted to reach the office manager but was not able to speak with him. The broker got wind of the fact she was reaching out to his supervisor and called our client at home and balled her out and berated her so much over the phone that she had a stroke later that evening. Fortunate for our client and not so fortunate for the broker, the nurse was present to hear the phone call that caused our client’s stroke.

After being engaged by our client we received and reviewed the brokerage statements and confirms for her account for the past year and discovered that the broker had been buying and selling without the knowledge or permission of our client. As a result, our client suffered hundreds of thousands of dollars in losses due to unsuitable trades, all while paying lots of commissions.

Needless to say, we made a very substantial recovery for our dear 90+ year old lady client.

Think You Or A Loved One Are A Victim Of Elder Financial Abuse ? Rex Securities Law Can Help

Rex Securities Law is a national elder financial abuse law firm which provides nationwide representation to investors seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers and elder financial abuse. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Discuss your case with experienced elder financial abuse lawyer Bob Rex at (877) 224-3199 for a free consultation.

State and Federal Agencies

Recognizing the severity of this problem, most states have established agencies to provide support to the public in cases of elder abuse. Here are a few. They generally will not assist with the recovery of money, you will need a lawyer for that.

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