Financial Abuse

FINRA specifically warns against this conduct. In most jurisdictions, this conduct qualifies the victim for damages in addition to the financial losses that the misconduct caused. These exemplary damages can include attorneys’ fees, costs, and potentially other damages.

In California, for example, this type of exploitation of an elder entitles the victim to recovery of their investment losses, attorneys’ fees, and costs.

Elder Exploitation Red Flags

Questionable financial advisors most often use a position of trust to place unsuitable transactions in the account of an elder. These transactions are often designed to generate commissions or fees and often occur without the elderly victim’s knowledge. Below is a list of some red flags that might indicate financial abuse of an elder:

Unnecessary and Excessive Trading

A financial advisor might make unnecessary trades in an to generate commissions that an elderly investor does not know about.

Manipulating the Victim’s Account Documents

A broker might encourage an elderly investor to sign a blank account forms. Or encourage an elderly person to sign forms without reviewing them.

Lack of Transparency

Bad actors want to hide their misconduct. Therefore, when pressed about their conduct, they might deflect or provide false reassurance.

Numerous, Unnecessary Accounts

Brokerage firms might open numerous accounts in the victim’s name to make misconduct difficult to spot.

Exploiting the Victim’s Ignorance

A questionable financial advisor might represent to his victims that their investment strategy is “too complicated” to understand. Or they might know their customer lacks the sophistication or awareness to understand That way, they can keep financial abuse victims in the dark about their conduct.

Questionable Account Transfers

Fund transfers to third parties or unknown accounts that the broker refuses to explain.

Overallocation in High-Fee/High Commission Investment and Products

Financial abuse victims often do not understand how how their broker gets paid. Knowing this, nefarious brokers might overconcentrate their victims in high-fee or high-commission products.

Ultimately, there are many ways an elderly investor can be the victim of financial abuse. If you believe you or someone close to you has been the victim of financial abuse, you ought to speak with a competent counsel about your specific circumstances.