Articles Tagged with elderly investors

According to the Consumer Financial Protection Bureau, 17 percent of Americans 65 and older, have already been the victims of financial exploitation.

A new study by the AARP Fraud Watch Network reveals that Americans who lose money to fraud typically exhibit a higher degree of confidence investing in unregulated investments and tend to trade more aggressively than other investors. The fraud watch network interviewed 200 victims of investment fraud and conducted 800 interviews with regular investors for this study that was commissioned a year earlier.

There has been a change in the way investors save for retirement. People are now more used to taking charge of their retirement since traditional pension plans have declined and technology has made it easier for average investors to enroll in trading and retirement accounts. The AARP study quotes Shadel, their lead researcher as saying “decline in traditional pensions has prompted millions of relatively inexperienced Americans to take on the job of investing their own money.” Technology has also made it easier for scammers to reach investors.

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding former UBS financial adviser Jeffrey Howell.

Per reports, Mr. Howell has been barred by the Financial Industry Regulatory Authority (“FINRA”)for providing a customer with false weekly account statements for over six years.  According to a settlement notice in connection with an investigation by FINRA , Mr. Howell sent these weekly statements with inflated values, at times overvaluing the account by close to $3 million.

Mr. Howell also allegedly used his own personal email account to distribute these reports, which compromised the accuracy of the firm’s books and records. Per BrokerCheck, Mr. Howell has not been licensed in the securities industry since 2014.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Christopher B Ariola.  Mr. Ariola was last employed and registered with Financial Telesis, Inc., an Aliso Viejo broker-dealer, from November 2012 to September 2014, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was previously registered with Bay Mutual Financial LLC from September 2004 to September 2012, according to BrokerCheck records.

FINRA filed Disciplinary Proceeding No. 2012034139101 against Mr. Ariola on August 25, 2016 alleging that he recommended that three elderly retiree investors invest a “substantial portion of their limited retirement assets in certain gold and energy stocks.”  The Complaint further alleged that these recommendations were unsuitable because they were not appropriate given each investor’s respective financial circumstances, investment objectives and low risk tolerances, and because the recommendations resulted in each account becoming concentrated in gold and energy stocks.  Gold is a commodity, which like energy stocks, can be traded.  Both commodities and energy stocks tend tobe risky investments and can lead to large losses.

According to his BrokerCheck report, Mr. Ariola has been the subject of four customer complaints.  The latest customer complaint led to a FINRA arbitration proceeding, according to BrokerCheck records.  The BrokerCheck records reveal that the customer alleged churning and unsuitability.  Churning is generally defined as excessive trading by the broker in the client’s account to generate commissions.  FINRA Rules require that recommendations made by the broker to the customer be suitable.  This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

We are pleased to announce that after a six-day long arbitration, our client was awarded his full net out-of-pocket damages of $142,168.00 by a Financial Industry Regulatory Authority (FINRA) Arbitration Panel.  The story was recently reported by InvestmentNews.  The arbitration panel also assessed all forum fees in the amount of $14,400 against the Respondent Garden State Securities, Inc.

The case was brought against Garden State alleging unsuitable investment recommendations, including over-concentration in Chinese stocks, penny stocks and low-priced securities, as well as leveraged exchange traded funds (ETFs). The claims also centered around allegations of churning and excessive trading. In the end, the Panel found Garden State liable.  Ultimately, broker-dealers must be held responsible for the recommendations their brokers make.

Our client’s case exemplifies many of the issues facing senior-aged investors today. Many seniors find themselves in situations where they have saved their entire lives for retirement and are seeking a financial professional to help guide them and preserve their nest egg. There is usually a lot of trust in the financial advisor-client relationship. But that trust can be easily and quickly abused. As they grow older, people generally became more conservative, downsizing and limiting expenses. Yet, all-too-frequently brokers recommend more speculative investments to their aging customers – for the broker’s own purposes (commonly higher commissions and fees). Such a situation is not appropriate nor permissible.

The Dow Jones dropped more than 600 points today in response to the Brexit vote.  This was reportedly the its eighth-largest point loss ever.  Meanwhile, the S&P 500 dropped more than 70 points today.  Certain financial company stocks dropped significantly as well.  Among them were Barclays, which dropped more than 20% and RBS who saw a 27% decline.  The financial sector as a whole reportedly had its worst day since 2011 dropping 5.4%.

While all of this may make the evening news more interesting to watch, the concerns on many people’s minds are undoubtedly, “How will this affect me and my portfolio?”  Especially with baby-boomers retiring each and every day, retirement portfolio losses so close to one’s retirement could be unrecoverable.

One of the first things to look at to see if your portfolio was significantly affected would be to examine at your exposure to the UK and your exposure to the financial sector.

New research shows that getting senior-aged investors to exhibit heightened emotions may cause those investors to more easily part with their hard-earned savings and retirement proceeds, according to a New Release published by the Financial Industry Regulatory Authority (FINRA).

The research was made possible with funding from the AARP Fraud Watch Network and the FINRA Investor Education Foundation.  In the study, Stanford University Psychologists found that inducing emotions in older adults increased their intention to buy falsely advertised items, according to the News Release.  As reported, the study was conducted on younger adults and older adults, with both groups were induced to exhibit excitement or anger before watching advertisements known to be misleading.  According to the Release, the young adults group tended to believe advertisements based on their believability, and not subjective emotional states, while older adults tended to believe the misleading advertisements based only on their emotional states.

One researcher was quoted as noting “Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective… Cons are skilled at getting their victims in to a heightened emotional state where you suspend rational thinking and willingly hand over your hard earned money to a crook.”

Brokers beware; FINRA is watching your firm, and you.  Becoming embroiled in a regulatory inquiry or investigation can become a major and costly headache and impediment to registered representatives’ business.

In January 2016, the Financial Industry Regulatory Authority (FINRA) released its annual list of priorities, showing what sorts of sweeps they may perform, and investigations they may bring, in the coming year.  brokers working in the securities industry should be aware of the priorities that are relevant to them, including those having to do with sales practice.

FINRA’s 2016 Priorities make clear that they intend a top-down review of the following areas, which may lead to firm-wide or broker specific investigations, including:

FINRA’s recently released Regulatory and Examinations Priority Letter made specific mention of multiple critical areas that the regulator will be focused on for the upcoming year.  The one that we will focus on today is the Senior investor and the steps that are and should be taken to prevent elder abuse.

As we have discussed here before, with the growing population of senior aged investors, this demographic is becoming increasingly significant in the retail investor pool nationwide.  Baby boomers are beginning to hit retirement age just as advancements in technology and medicine are leading to longer and longer lifespans.

Per 2012 census data, there are 76.4 million baby boomers which represent close to one-quarter of the then estimated U.S. population of 314 million.  These figures have coupled with longer lifespans across the boards, means that there is the potential for disaster if baby boomers’ retirement savings are not properly managed.  FINRA recognizes that “the consequences of unsuitable investment advice can be particularly severe for this investor group since they rarely can replenish investment portfolios with fresh funds and lack the time to make up losses.”

Jenice Malecki taped a session on elder financial fraud for Case In Point with Bob Singer , Bob Singer’s weekly segment in Wealth Management. He is a veteran Wall Street lawyer, a weekly contributor to Wealth Management, and known for his own blog BrokeandBroker. Jenice Malecki was a guest on his show this week, where she shared her insights on matters related to diminished capacity, the elderly, and Securities Law. Over the years, Ms. Malecki has been televised widely on Securities industry related topics. Stay tuned for this video on our blog.

Earlier this week, Adam Nicolazzo and Robert Van de Veire visited the Hudson Guild Senior Center to educate their members about Elder Financial Exploitation.