New York City lawyers Fighting to recover investor losses since 2004
Skyscrapers at midtown New York City with the East River on the background
New York City Lawyers Fighting to recover investor losses since 2004

Elder Financial Abuse

Background of an Underreported and Growing Problem

The Population of the United States is Aging Rapidly:

According to recently published statistics (by the Population Reference Bureau in Washington, D.C.), the number of persons ages 65 and up in the United States has been increasing steadily since the 1960’s. Moreover, the population of those 65 and up is excepted to double from 46 million people to more than 98 million people by 2060.

This dramatic shift in our population represents an enormous demographic change that brings with it many challenges.

Negative Consequences of an Aging Society – the Rise of Elder Abuse:

Among the challenges presented by a rapidly aging society is the significant rise of elder abuse.

Elder abuse comes in many forms, including physical abuse and exploitation. In addition, owing to the fact that many seniors suffer from the onset of dementia or Alzheimer’s, seniors are particularly susceptible to elder financial abuse by unscrupulous and predatory individuals.

Financial Elder Abuse by the Numbers:

  • A 2010 Elder Fraud Survey conducted by the Investor Protection Trust stated that 1 in 5 Americans over 65 years of age has been victimized by a financial fraud of some sort;

  • According to a 2011 MetLife Mature Market study, financial exploitation of the elderly costs seniors roughly $3 billion each year;

  • According to a 2014 report released by the Elder Justice Roadmap, only 1 in 24 families reports elder abuse (whether physical or mental abuse, neglect or financial exploitation) to authorities;

  • As recently reported in October 2016 in the Wall Street Journal, investors ages 50 and up hold 77% of all U.S. financial assets. These same individuals are most at risk for ailments like dementia and Alzheimer’s, and thus by extension, they face a heightened risk of elder abuse and financial exploitation.

Recent Efforts to Put a Stop to Elder Financial Abuse

Fortunately, the rising problem of elder financial abuse has not gone unnoticed.

In particular, with regard to elder abuse as it concerns investments by seniors and the potential for these at-risk investors to be defrauded or otherwise financially exploited, various entities and agencies, including the Securities & Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), the Commodity Futures Trading Commission (“CFTC”), and the Consumer Financial Protection Bureau (“CFPB”), to name a few, have acknowledged that elder financial abuse is a real and growing issue that demands our attention.

Some of the recent efforts undertaken to address elder financial abuse include:

  • In March 2013, as part of National Consumer Protection Week, the CFPB published an article concerning elder financial abuse. In particular, the article discussed how elder financial abuse can be difficult to spot, and offered some strategies on how families and various agencies, both at the federal and state level, could work to address this problem;

  • In September 2013, various agencies including the CFPB, the CFTC and the SEC, among others, jointly issued guidance concerning reporting elder abuse. Specifically, these agencies sought to clarify the privacy provisions of the Gramm-Leach-Bliley Act, offering guidance to financial institutions that suspected elder abuse could be reported to the appropriate local, state or federal agencies;

  • Various states have enacted statutes expressly providing for damages for elderly investors who have suffered investment losses due to misconduct;

  • In late 2016, FINRA submitted a proposed rule to the SEC aimed at protecting senior investors, as well as other vulnerable persons, from financial exploitations. Under this proposed rule, financial institutions including brokerage firms, would have the right to place a temporary hold on a client’s account when circumstances suggest that financial exploitation could be occurring;

  • In 2017, FINRA Rule 2165 was accepted, and accordingly amended FINRA Rule 4512. Rule 2165 governs how stockbrokers or financial advisors can access their clients’ account information, and further, provides guidance on when a financial advisor may take action to protect their clients;

  • On February 5, 2018, FINRA’s New Rule 2165 (Financial Exploitation of Specified Adults) will become effective.

Red Flags of Possible Elder Financial Abuse

While not exhaustive, the following red flags may be a signal of investment fraud or indicative of elder financial abuse:

  • ‘If it sounds too good to be true, it probably is’: when a financial advisor suggests that an investment is guaranteed, or that it carries no risk, the investor should be wary as such statements are classic indicators of an investment scam or fraud. In addition, if the investment is recommended as being able to provide a high rate of return, the investor should be very cautious;

  • High-pressure sales tactics: a reputable and ethical financial advisor will not seek to pressure his or her client into making an impulse investment. Therefore, if you encounter a situation where someone is pressuring you to act fast and invest, you should decline the offer;

  • High-volume trading: unscrupulous brokers may seek to take advantage of the elderly by engaging in a high number of trades, each generating a commission, in cases where an elderly investor may not notice or be alarmed by the high level of account activity;

  • Unregistered investment professionals: investors are well advised to conduct some due diligence prior to making an investment using their hard-earned money. Part of this process should include conducting a basic background check on the investment professional seeking to sell a financial product. Fortunately, the SEC, FINRA, CFTC and other related agencies all have databases that includes information on registered investment professionals and their license status and disciplinary history, if any;

  • Prior misconduct or regulatory discipline: when conducting due diligence on an investment professional, you should seek to ensure that the person in question has a clean regulatory record. FINRA, which oversees the brokerage industry and the financial advisors employed by various brokerage firms, allows investors to search online using a tool called BrokerCheck. The SEC also provides an online tool to check the backgrounds of Investment Advisor Representatives.

Confidential, No-Cost Consultation

The attorneys at Law Office of Christopher J. Gray, P.C. possess considerable experience in successfully representing elderly investors who have been taken advantage of by unscrupulous stockbrokers. If you believe that you or a loved one may have a claim against a stockbroker or financial advisor, you may contact us via the contact form on this website, at (866) 966-9598 or for a no-cost, confidential consultation.

Client Reviews
Chris did a great job with my case. He managed my expectations in the beginning of the process, consulted me along the way and always made sure I knew the advantages and disadvantages of decisions we collectively needed to make. He is very knowledgable about the finanical industry and how they work legally, which very much helped me and my legal initiative successful. Chris is straight-forward and doesn't mess around. I was very please with his professionalism and the outcome of my case, and would recommend him to anyone that is pursuing action against any company in the financial services industry. Greg
Chris displayed extreme professionalism. His dedication, research, and concern for his clients pocket book was displayed to the fullest when Chris tried my case. His diligence and perserverance were rewarded when we won our case. I have reccommended Chris to numerous friends who have concurred with my positive assessment. Jay
Chris became my lawyer for a FINRA Arbitration case in 2008. He listened to my complaint, filed notice soon after and engaged an expert witness. We discussed mediation, found it to be agreeable and approached the defendant who at first agreed and at the last minute reneged. At all times Chris kept me informed of the process, costs and developments. Andrew