As the U.S. baby boomers look toward retirement, a larger percentage of the population will become senior-aged individuals who will have a substantial amount of savings that may be used to fund investments. It is more important than ever to keep in mind that everyone needs to take as much care over their retirement nest egg now as they did when they were diligently saving. The New Jersey Bureau of Securities has issued a new release to commemorate World Elder Abuse Awareness Day and remind senior-aged investors to be wary of financial fraud.
In the news release, the NJ Bureau noted that one in five Americans over the age of 65 are victims of financial fraud, making it one of the fastest growing forms of elder abuse. However, the news release noted that anyone over than 55, whether working or retired, may be viewed as a potential target for financial fraud.
The NJ Bureau of Securities listed several types of financial fraud to be careful of, including:
- Unsuitable Investments: this involve placing their senior clients with investments that are not suitable for their needs or age. For example, annuities and private placements are often inappropriately sold to seniors. These products may include significant penalties for withdrawing money before a certain date, or for transferring the annuity to another person. The also may provide high annual expenses as well as the loss of principal – leaving little or nothing for the investor to leave to his or her heirs.
- Affinity Fraud: this happens when victims make investment decisions based on the recommendation of a trusted “friend” based on their similar age, ethnic background, religious affiliation, or other affinity. There is nothing inherently wrong about sharing deeply held traits or interests with your financial professional. But there are plenty of scammers who have no qualms about using these connections to lure and keep victims. One could certainly argue that Bernie Madoff, exploited victims he had an affinity to, his clients, who trusted him because he seemed to understand their specific concerns and support their causes. We at Malecki Law have represented many groups of investors who were each led to trust a financial advisor based on common ties such as neighborhood involvement and church affiliation.
- Free Lunch/Dinner Seminars: there is no such thing as a free lunch. Offers like this are sometimes made by scammers who invite senior citizens to “free lunch” seminars at which the guests are treated to a sales pitch for an unsuitable investment. Anyone who attends a “free lunch” event should be prepared for what follows the meal – and should remember that accepting the free lunch does not obligate anyone to make an investment. Consumers should not confuse a sales pitch for sound financial advice. The presenter will not know each attendee’s specific financial circumstances and will not be in a position to know how they should best invest their money. Finally, seniors should never provide their personal information at these events.
- Telemarketing Scams: Telemarketing scammers often target seniors, knowing that seniors who live alone may be lonely, have time to listen and talk, and look forward to receiving telephone calls. Anyone who listens to a telemarketing pitch should be very cautious. Never buy anything over the phone or provide any personal or financial information to a caller. If you are pressured in any way to answer questions or accept an offer, simply end the conversation and hang up.
The NJ Bureau of Securities also noted the following red flags to watch out for, which may be an indication of fraudulent conduct in a brokerage or investment account:
- You cannot locate the person to whom you gave your investment money or power of attorney over your account.
- You wrote the salesperson a check in his or her name, or the name of a business you do not recognize as a widely known company.
- Your account has experienced unexplained, excessive losses.
- You no longer receive brokerage statements.
- You did not receive any documents in writing regarding your investment.
- You signed investment documents that you did not understand.
- You have added a new friend to a joint account, property title, will or mortgage. Or you have given a new friend power of attorney.
Malecki Law has previously represented many senior-aged investors successfully in FINRA arbitration proceedings involving unsuitable investments and fraudulent securities schemes, as well as others. If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.