The Financial Industry Regulatory Authority (FINRA) filed a proposed rule with the Securities & Exchange Commission (SEC) aimed at protecting elderly investors from financial exploitation. Financial elder abuse is one of the more common forms of broker negligence and investment fraud, causing elderly investors to lose millions of dollars.
The proposed rule would allow brokers, brokerage firms, banks, and registered investment advisers to put a hold on account transactions if they suspect fraud against an elderly investor. The goal of the rule is to protect investors from scams and financial abuse by strangers, family members, or financial professionals who are in a position to take advantage of an elderly investor.
One rule would require financial firms to make reasonable efforts to obtain the name and contact information of a trusted member of an elderly client’s family before authorizing a suspected trade. The other proposed rule would permit companies to place a temporary hold on the disbursement of funds or securities where there is a reasonable belief of financial exploitation. This rule would give the company time to notify the family before allowing the transaction to proceed.
The rule has been praised for its efforts to curb the growing epidemic of elderly financial exploitation, but the proposals are not without critics. One main criticism is that those who would be charged with spotting financial abuse are not properly trained to do so and would be ineffective unless training is provided first. Another critique concerns timing: how long does it, or should it, take to spot financial abuse? Some critics contend it could take months to resolve suspected elder financial abuse, leaving the transaction in limbo during that time.
Do You Suspect Someone of Committing Elder Fraud?
It is illegal to take advantage of the elderly for financial gain. Many states even have specific statutes prohibiting such conduct and awarding attorneys’ fees against the wrongdoer. If you or a loved one have been the victim of elder financial abuse, you may have certain legal rights that require your immediate attention.
The attorneys at Dimond Kaplan & Rothstein, P.A. are able to assist you or your loved one in recovering money lost through a financial scam. Contact us to schedule an appointment or consultation today.