What Victims of Elder Financial Abuse by Their Broker Should Know When Filing a FINRA Arbitration Claim

This is what happens when a stockbroker, financial advisor, or investment adviser misappropriates or misuses the funds of an older customer (age 65 or older) who entrusted them to invest and manage their money. Elder financial abuse is elder abuse. It is a crime. It also can be grounds for suing your financial advisor and their firm.

• Senior financial exploitation
• Elder investment fraud
• Senior investor fraud

Elder financial abuse is often committed by a perpetrator who the victim knows and, in other cases, by strangers. Shepherd Smith Edwards and Kantas (investorlawyers.com) represents seniors and their families against brokers who sought to take advantage of an older customer and caused them serious financial harm.

• Older investors are a vulnerable target. They may have accumulated wealth, such as a solid nest egg made out of life savings and retirement funds.
• Senior investors, particularly older ones, may be suffering from declining physical health or cognitive issues, such as memory loss, confusion, and dementia. This can make them easy to take advantage of.
• Social isolation and loneliness can make elderly investors easy prey to financial advisors falsely claiming to have their best interests at heart.
• Incidents of elder financial abuse often go underreported. A victim might be too embarrassed or ashamed to admit they were defrauded. They could be worried that if anyone finds out, their family might decide they should no longer be allowed to live independently or make decisions on their own.

• Unauthorized trades in your account.
• Excessive trading, which is an illegal practice known as churning.
• Your financial advisor placed your money in a margin account even though you are conservative retiree who made it clear that you are risk-averse.
• You are an inexperienced older investor whose money was placed in Regulation D private placements that should only be sold to accredited investors.
• Your financial advisor refuses to return your call or answer questions about your investment concerns.
• Your broker promised you high returns while claiming there would be no risk to your investment.
• You are missing funds in your brokerage account.
• Your portfolio is losing a great deal of money even though the markets are doing well.
• Your broker sold you investments that are unregistered or were never properly vetted by the broker-dealer.
• There are charges on your account statement you don’t recognize.
• Your financial advisor involved you in a Ponzi scam or another kind of investment scheme.

According to the American Association of Retired Persons (AARP), one in five Americans in the 65 and over age group is affected by elder financial exploitation. FINRA established rules to prevent and detect senior investor fraud.

• FINRA Rule 2165. Financial Exploitation of Specified Adults: Broker-dealers are allowed to place a temporary hold on disbursing money or securities from accounts belonging to “specified adults.” That term refers to adults age 65 or older or those who are mentally or physically impaired.
• FINRA Rule 4512. Customer Account Information: A brokerage firm has to make reasonable attempts to secure the contact information of a person (age 18 or older) that the older customer trusts in the event that senior financial abuse is suspected.
• FINRA Rule 2111. Suitability: Brokers are supposed to ensure that any recommendation is appropriate for an older customer given their age, financial goals, risk tolerance level, and other key investor profile descriptors.
• FINRA Rule 3241. Registered Person Being Named a Customer’s Beneficiary or Holding a Position of Trust for a Customer: Registered persons at a brokerage firm cannot be named as beneficiary, executor, or trust to a customer’s estate or account unless they are an immediate family member. There are protocols for reporting the familial relationship and obtaining approval. The same goes for a registered person who is directly related to a customer and wants power of attorney.

FINRA may be able to hold a broker accountable for senior financial exploitation by opening an investigation and perhaps even barring and sanctioning them. But if you want to recoup your losses against a bad broker, you should consider filing an elder financial abuse claim with the help of a skilled stockbroker misconduct attorney.

• Report any suspect activity by calling the FINRA Securities Helpline for Seniors at 1-844-57-HELPS (1-844-574-3577).
• Contact your state securities regulator.
• Do NOT contact the brokerage firm or your financial advisor. They won’t admit to wrongdoing. They may even try to sabotage any chance you might have of filing a successful elder financial abuse claim against them.
• Reach out to our savvy elder financial abuse attorneys so we can help you assess what happened and whether you should sue your broker.

At Shepherd Smith Edwards and Kantas, we work with many older investors and their families in recouping losses caused by this type of broker fraud. We are well aware of the impact this type of crime can have on your ability to support yourself, as well as take care of day-to-day expenses and any medical bills—not to mention the emotional toll this can take.

• This is not the kind of investment loss recovery claim you want to make without experienced senior investor lawyers representing you.
• Your investor loss lawsuit will have to be made in FINRA arbitration. That is because customers who work with brokers usually sign a mandatory predispute arbitration clause agreeing that any disagreements will have to be resolved through there.
• Any ruling by the arbitration panel is considered final. You want to make sure you have solid securities representation that knows how to build a solid case on your behalf.

Step 1: You (or, ideally, your senior investor fraud lawyer) submit your Statement of Claim in FINRA arbitration. The broker-dealer has to submit their response.

Step 2: Through a ranking and striking process, your elder investor fraud attorneys and the lawyers for the other side will select who sits on the arbitration panel.

Step 3: Discovery and the pre-hearing process take place.

Step 4: The final hearing.

Step 5: The FINRA arbitration panel deliberates and has thirty days after the final hearing to issue its decision.

Settlement: The two parties come to a settlement agreement before or during the arbitration process.

Award: The arbitration panel announces whether or not they will grant an award to the older investor that the broker-dealer is ordered to pay.

Denial of Claim: The panel rules in favor of the brokerage firm, and the customer receives nothing.

• We represent older investors, their families, and others tasked with their care against Wall Street firms, regional broker-dealers, independent brokerage firms, and investment advisers. More than 90% of our clients have secured awards or settlements because of our dedicated efforts.
• Our senior financial exploitation attorneys can help you determine whether your broker made unsuitable investment recommendations, made misrepresentations and omissions to you, overconcentrated your account, engaged in unauthorized or excessive trading, or misappropriated your funds.
• Even if the financial advisor had no malicious intent, if their negligent or careless actions caused you to sustain serious losses, you may be able to sue them for senior investor fraud.
• We understand how rampant senior financial exploitation is, which is why we have partnered with elder law firm McCulloch & Miller to help seniors and their families protect their assets.
• When you work with us, you can trust you will receive seasoned securities representation and personalized and compassionate attention. Shepherd Smith Edwards and Kantas understands the life-altering consequences that falling victim to elder financial abuse can create. We are here to maximize your chances for a full financial recovery.

Because we work on a contingency basis, we are only paid for our securities law representation if we secure an award or negotiate a settlement for you.

To schedule your free case assessment with Shepherd Smith Edwards and Kantas, call (800) 259-9010 or contact us online.