Investment Fraud Red Flags for Elderly Investors

by InvestorLawyers on June 13, 2012

in Arbitration,Auction Rate Securities (ARS),ETF,FINRA,Hedge Funds,Principal Protected Notes,Retirement,SEC,Securities Fraud,Suitability

According to securities fraud attorneys, elderly and retired individuals are frequently the targets of securities fraud. While this is not likely to change, elderly investors can be aware of red flags that could indicate fraud has occurred. Some of these red flags include recommendations for investments that are typically unsuitable for elderly investors, unsolicited investment offers, unrealistically high return promises, promises of little or no risk, request for up-front payments, high pressure tactics, direct mail offerings and Internet offerings.

Investment Fraud Red Flags for Elderly Investors

In regards to suitability, FINRA Rule 2111 will replace NASD Rule 2310 on July 9, 2012. Factors determining an investment’s suitability for each investor will now include the customer’s age, tax status, financial situation and needs, liquidity needs, investment experience, investment objectives, risk tolerance, investment time horizon and other investments. A broker or adviser must consider these factors before making a recommendation after July 9.

According to securities fraud attorneys, because of an elderly investor’s age, asset allocations that are weighted in investments with a long time horizon or higher risk investments are often considered inappropriate. Potentially unsuitable investment products for elderly investors include:

  • Auction rate securities (ARS)
  • Hedge funds
  • Equity-indexed annuities
  • Return optimization securities
  • Structured products
  • Principal protected notes (PPN)
  • Leveraged and inverse exchange-traded funds (ETF)
  • Asset back securities
  • Reverse convertibles and commodity futures-linked securities
  • Unlisted real estate investment trusts (REIT)

If you are an elderly investor who has been improperly recommended one of the above investments, or have noticed any of the other red flags pertaining to your recent investments, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Previous post:

Next post: