A few weeks ago, I presented a Continuing Legal Education class to the Montgomery County Bar Association titled Seniors and the Potential for Fraud. This class was an intersection of my past career of fifteen years as a financial/securities regulator and my present as an elder law attorney. While the class was aimed at attorneys and how they can help their clients, there are several takeaways for seniors and their families, or financial advisors that can help their senior clients.
FINRA, the Financial Industry Regulatory Authority, created a senior securities helpline in 2015 with a call center located in Boca Raton, Florida. Since its inception, it has received over 18,000 calls. Anyone who is helping a senior can call, in addition to the individual themselves, such as an attorney, a family member, an investment advisor, a financial advisor, etc. Seniors make up a significant portion of the population and as of 2014, Seniors controlled $3.5 trillion in retirement assets.
With the onset of Covid-19, Seniors are even more at risk for being exploited for fraud. They are isolated, separated from friends and family for long periods of time. Already, some may be hard of hearing or have difficulty seeing. Here are some red flags to look for:
- How is their appearance? Disheveled? Are they getting dressed each day in regular clothes? Do they have bruises? Seem shakier then normal? Seem confused when talking to them in person or on the phone?
- Has someone inserted themselves in their lives as an invaluable advisor to their detriment? Maybe changing their plans, such as their goals or will? Such as a financial advisor or investment advisor?
- Were they recently widowed?
Each of these makes a senior vulnerable for exploitation.
FINRA has rules in place to help protect seniors from fraud. Rule 4512, known as the “Trusted Contact Rule” gives the broker or investment advisor someone to call if they feel the senior client is acting out of character, erratically or someone is unduly influencing them in order to help protect their assets.
Rule 2165 allows firms to put a hold on a customer’s accounts if they suspect fraud or a “specified adult” is being exploited”. Regulatory Notice 19-36 proposes a rule which will limit a Registered Person at a member firm to be named as a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust or on behalf of a customer. The proposed rule would protect protect investors by requiring all member firms to affirmatively address registered persons being named beneficiaries or holding positions of trusts for customers.
If you have any questions or concerns about potential fraud or exploitation of a senior, please contact either Finra’s Senior Securities Hotline by clicking here or you can contact me by clicking here.