Churning and Unauthorized Trades In Elderly Clients’ Accounts
FINRA Targets Financial Elder Abuse
Large Arbitration Awards And Charges
Seniors face financial elder abuse from a number of directions – caregivers, insurance agents, strangers, scammers, contractors, and financial advisors and stockbrokers to name but a few. Caregiver theft is often in the news and a very real problem our elder abuse litigators see routinely in our practice. But financial advisors, insurance agents and brokers can wreak havoc on a senior’s finances as well. An insurance agent may sell an expensive and unsuitable deferred annuity to a senior, a financial advisor may sell a high risk, unregistered security, or a stockbroker may churn trades in senior’s investment account figuring they will never notice the volume of commission-generating trades. Whenever a senior is victimized by financial elder abuse here in San Mateo County or elsewhere in California, we can help. The financial elder abuse attorneys at Evans Law Firm, Inc. can be reached at (415)441-8669.
Recent Examples of Broker Financial Elder Abuse
The Financial Industry Regulatory Authority (FINRA) is a regulatory agency that has been increasingly focused on protecting older Americans from financial elder abuse from advisors and brokers. Two recent FINRA actions illustrate how FINRA’s involvement in financial elder abuse cases.
In the first example, FINRA recently charged a retail broker with securities fraud for churning the account of an elderly, blind widow. The “deceptive and fraudulent scheme” allegedly generated $243,000 in commissions for the broker and caused the 77-year-old customer $184,000 in net losses over a three-year period. According to FINRA, the broker had been the broker of the elderly client and her now-deceased husband since 1995. The client’s husband passed away in 2012In the years following his death, the broker allegedly placed more than 700 trades on more than 200 different securities and charged a markup or commission of between 2.5% and 3% on each sale, ultimately rising to 3.75% to 4.25% when he switched firms, according to FINRA’s complaint. Based on the level of trading and commissions charged, there was “little to no possibility that the customer would profit from such trading,” according to the regulatory body. The case is ongoing.
In the second example, a FINRA arbitration panel recently awarded a 94-year-old heiress $19 million against a bank and two of its employees (who were also the victim’s grandsons) based on allegations of fraud and financial elder abuse brought by the victim. The two brokers allegedly made a number of “extremely complex, highly risky” investments worth more than $72 million with her money, which led to losses of more than $10 million, but allegedly yielded the men and the bank where they worked hundreds of thousands in fees. According to FINRA, defendants were responsible for hundreds of transactions worth hundreds of millions of dollars, including many where they and their employer stood to earn a profit as market makers, or broker-dealers that trade particular stocks. The complaint also alleged missing account statements, document shredding, and unexplained credit-card charges. In total, the elderly victim claimed $69 million in damages. She was awarded $19 million by a FINRA arbitration panel and defendants are considering challenging the arbitration panel’s ruling.
Spotting Signs of Financial Elder Abuse
Family and loved ones should be mindful of any suspicious activities and alert elder counsel if they suspect any problems. There are short time frames to bring cases, so always reach out for help immediately if something is wrong. Here are a few telltale signs of financial elder abuse:
- New bank accounts the senior and family member can’t access
- Missing records
- Frequent and unannounced visits by persons wanting to transact business with a senior
- Changes in where Social Security and retirement checks are deposited
- Unpaid care or utility bills
- Sudden increase in ATM withdrawals or unfamiliar purchases or spending habits.
- New friends or “advisors” whom you have never heard of in your loved one’s life before.
- Credit cards maxed out, used without permission, unpaid or otherwise harming an older person’s credit score
- Coercing a senior to make gifts or advance loans
- Changes in trusts, Wills, Powers of Attorney or other important legal documents
- Refusing to provide money for necessary or shared expenses like food, clothing, transportation, medical care or medicine
Ingrid M. Evans and our other financial elder abuse attorneys represent seniors in San Mateo County and throughout California who are victims of any kind of elder abuse, including financial elder abuse. Ingrid and our other elder abuse attorneys can be reached at (415) 441-8669, or by email at firstname.lastname@example.org. Ingrid and her team of financial elder abuse attorneys will pursue all remedies available to you including an award attorneys’ fees and expenses you’ve incurred in bringing your case.
 Evans Law Firm, Inc. was not involved in either of these case examples in any way.