FINRA Acts to Protect Senior Investors

Posted February 28th, 2018 by .

Categories: Investment Fraud.

As the U.S. population ages, senior investors increasingly have become more vulnerable to securities fraud.  Too often, caregivers ingratiate themselves with vulnerable seniors, only to secure powers of attorney and then use their new powers to drain the senior’s investment account. The so-called trusted caregiver then vanishes never to be seen or heard from again.  The victim soon learns they are left with little or no means of support and little hope of recovering their lifetime savings.

To better protect seniors from this type of investor fraud, the Financial Industry Regulatory Authority (FINRA) has implemented new industry conduct rules specifically aimed at curbing financial elder abuse.

First, brokers now must seek to get the name of, and contact information for, a person who the senior customer trusts to be contacted should the broker suspect foul play. This person could be a spouse, a son or daughter, a guardian or a trusted friend.  The purpose of the rule is to establish a line of communication between the broker and a responsible party who can come to the aid of a senior when the broker suspects a senior customer is being scammed.

Second, brokers may place a temporary hold on a disbursement of funds or securities when there is a reasonable belief that a senior customer is being victimized.   Brokers who place holds on a senior’s account must promptly notify the trusted contact of the temporary hold. The notice is designed to bring attention to the issue and resolve it swiftly.  Placing a hold on otherwise legitimate disbursements may be an irritant for some, but it is crucial protection against investor fraud given the extreme challenges in tracking down cheats and deadbeats.

Brokers who fail to fulfill their regulatory duty to protect senior customers can be liable to a senior customer who has been victimized by securities fraud.

FINRA enacted these conduct rules for your protection.  To take advantage of this investor protection, it is important that you work with your broker and provide the contact information of a trusted person. Without your cooperation, you effectively have relieved the broker of much of their responsibility for protecting you against financial elder abuse.    So be vigilant and protect your lifetime savings from scam artists.

If you feel you have been the victim of financial elder abuse, call one of the investment fraud lawyers in the New York and San Diego offices of Sanford Heisler Sharp LLP.

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Charles Field

Charles H. Field is counsel in the San Diego office of Sanford Heisler, LLP, a national law firm with offices in New York, Washington, DC, San Francisco, and San Diego. He received his J.D. from McGeorge Law School in 1986 and his Bachelor of Arts in Liberal Arts from Indiana University-Indianapolis in 1977. Mr. Field also completed European legal studies at the University of Edinburgh and the University of Salzburg.


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