Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.
Elder Financial Abuse
Protecting Senior Investors from Investment Fraud & Misconduct by Brokers and Financial Advisors
Senior and elderly investors receive special protections under both state and federal law that prevent their stock brokers, investment advisors, and other financial professionals from fraudulently obtaining and benefiting from their assets.
Elderly investors who suffered substantial investment losses as a result of fraud by a financial professional may be legally entitled to recoup their money, as well as attorneys’ fees, punitive damages, and compensation for pain and suffering they endured as a direct result of the fraud.
Securities arbitrations, FINRA arbitration proceedings, individual civil actions, and even class action lawsuits may be brought by a living or deceased victim of elder financial abuse or their representative: a spouse or family member, neighbor or friend, or court-designated power of attorney, conservator, or guardian.
Victimized by Senior Investment Fraud?
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What is Elder Financial Abuse?
Different states define elder financial abuse differently. However, broadly, elder financial abuse occurs anytime a family member, nursing professional, financial institution, or other third party takes or assists others in taking the personal property of an elder for wrongful use or with an intent to defraud the elder. Personal property includes real estate and land, as well as investments like stocks and annuities; goods, such as fine jewelry or antiques; and even debts.
Generally, the following three criteria must be met to prove elder financial abuse has occurred:
- The victim qualifies as an “elderly person” according to the relevant state law
- The broker or advisor wrongfully appropriated the elderly victim’s property
- The broker or advisor knew, or should have known, that their conduct was fraudulent
California Elder Financial Abuse Laws
The specific provisions of elder financial abuse laws also may vary state to state. Here’s a few general provisions of California’s elder abuse statute to keep in mind:
- Any contract with someone aged 65 or older is subject to special scrutiny.
- Elder investors may make legal claims for elder financial abuse even if they’re not mentally incapacitated.
- Financial elder abuse may occur even if the senior investor has not actually suffered any losses yet. For example, signing a fraudulent transfer of title before the title is transferred, opening a fraudulent account before transferring funds into it, or authorizing a trade that hasn’t yet been executed.
What Senior Financial Exploitation Looks Like
Senior investors are particularly vulnerable to stockbroker misconduct and investment fraud.
Most are living on a fixed income that leaves little room for steep investment losses and increases the consequences of investment risk. Some may be managing estates, pensions, and other investments on behalf of a deceased spouse. Others have investments properties in multiple states or in remote areas. Even in the absence of benign and serious cognitive impairments that come with age, financial planning and investment management for seniors can be a challenge.
With unique and often comprehensive access to seniors’ assets and portfolios, brokers and investment advisors are in a prime position to take advantage of seniors and prey on elderly investors for personal gain.
A few forms of broker and investment advisor misconduct may disproportionately affect elderly investors.
For example, over concentrating a retired investor’s entire life savings into a single, high-risk stock, security, or other financial product – such as Puerto Rico bonds – endangers them of losing everything in the event of a market downturn or destabilizing event.
Elder investors on a fixed income may also be exposed to unnecessary risk by unsuitable investments recommended or sold to them by a broker or advisor:
- A deferred annuity that prevents an ailing, elderly investor from accessing their money for years without incurring steep fines
- A non-traded REIT that’s not easy to sell and which carries significant risk should the REIT decline in value
- An alternative investment like foreign exchange currency funds with zero expected return before costs
- An account for leveraged precious metals trading
Brokers and investment advisors may exploit a socially isolated senior investor or one experiencing cognitive decline by misrepresenting, the risks and benefits associated with these and other financial products to senior investors, or omitting material facts about investments, in order to persuade or coerce them to make financial decisions that primarily benefit the broker or advisor.
For example, financial professionals may earn steep commissions for selling certain, sometimes high-risk investment products like annuities, or charge senior investors excessive fees for executing certain trades, like the sale or liquidation of an investment.
Still other brokers and investment advisors may simply forge checks, contracts, and other account documents that fraudulently transfer money from an elderly investor’s account directly to a financial professional or to an account they have fraudulently opened in the senior investor’s name.
Elderly Parents Scammed?
Elder fraud is often discovered by children, who find evidence that their senior parent has been scammed from a bank statement, credit report, insurance policy, mortgage loan, or other account document.
The degree of your involvement in discovering and remedying senior fraud on behalf of your parents will be determined by your personal relationship with your parents, as well as your legal relationship to their assets. A child must have financial power of attorney to file a legal claim to recover a parent’s investment losses, or even access pertinent financial documents or speak to parents’ financial advisors. Courts may also grant limited or complete guardianship or conservatorship to children when their parents are deemed incapable of making responsible financial decisions on their own.
Elder financial abuse often goes unreported because senior investors who are still managing their own assets are too embarrassed to notify or seek help from their children when they’ve been victimized and exploited. For some, avoiding the shame associated with falling prey to elder fraud may deter legal action.
Children who believe their parents are the victims of an investment scam or other fraudulent conduct by a broker or financial advisor are encouraged to contact our attorneys for more information.
How We Can Help
We understand that elder financial abuse can be devastating to investors and their families. Often, the discovery of senior investment fraud is only the beginning of a long and stressful journey to becoming whole, and regaining confidence and financial security.
Our attorneys can help you and your family navigate the many and complex options for legal recourse available, and decide if legal action is right for you.
We offer attorney consultations completely free and without any obligation to pursue a case.
We represent individuals in securities and FINRA arbitrations, as well as classes of elder investors suffering a common harm from a specific financial professional or financial institution. In all cases, we don’t require any payment for our services unless we are successful in recovering your investment losses.
Contact Our Team
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Scott focuses his law practice on securities arbitration and litigation and plaintiff-side class action litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others.
David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.
Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.
Our Financial Fraud Experience
We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California, Top Plaintiff Lawyers in California, The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).