Articles Tagged with Senior and Vulnerable Investors

Recently the Government Accountability Office (GAO) published a report about the extent of elder abuse by guardians and measures that exist to protect older adults. This has become an issue of utmost importance as the number of older adults, over the age of 65, are expected to nearly double to 88 million by 2050 (GAO Report 2016). A “guardian” is a legal relationship created by a state court by granting one person the authority and responsibility to make decisions on behalf of an incapacitated individual, like an older adult. The appointed guardian could be a family member, a professional guardian, or a public guardian. According to the GAO report the most common type of elder abuse inflicted by guardians appear to be financial exploitation. This GAO report attempted to identify red flags of abuse, study reported complaint data about guardianship abuse in 6 states- California, Minnesota, Florida, Ohio, Texas and Washington- and evaluate measures that are in place to help protect older adults.

The federal government does not regulate or directly support guardianship but they may provide indirect support through federal agencies, by sharing information and providing funding for state and local courts who oversee the guardianship process. There are limitations on the data available to study cases of elder abuse because states do not have adequate data on number of guardians serving seniors and not all cases of elder abuse are reported.  A close look at reported elder abuse cases since 2010, identified using public-record searches reveal instances of misappropriation of funds, falsified payments, mistreatment of the elderly, diversion of payments, overcharging accounts, excessive spending and inflated personal expenses, and neglect.

FINRA ’s Role in Fighting Elder Financial Exploitation

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: