Elder Financial Abuse

Elder financial abuse is the illegal use of an elderly individual's financial resources for personal benefit by someone in a position of authority or trust over that older adult. Examples of elder financial abuse include misusing funds, which means using an older adult's assets or money without their consent for financial gain and personal expenses.

It also includes fraud and scams, which means deceiving older adults into giving away their money or private financial information. Financial advisors are trusted helpers who must always do what is best for their clients. Traditional stockbrokers may not have this same responsibility. However, they must still follow certain rules the FINRA sets to protect elderly individuals from financial harm. Elder financial abuse may take place by members of the elder’s family or by trusted institutions like care facilities or brokerage firms.


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Elder Financial Abuse Statistics

The prevalence of elder financial abuse varies worldwide and may be underreported for a variety of reasons, including shame, fear, or lack of awareness. Elder financial abuse is estimated to affect millions of older adults worldwide annually. A significant number of elder financial abuse cases are believed to go unreported.

Recent studies show that only a fraction of cases are officially documented. In most reported cases, elder financial abuse is committed by family members and caregivers or by financial advisors or fiduciaries.

Older adults aged 80 and above are more susceptible to financial exploitation, and elderly women tend to be targeted more often than men. The NCOG (National Center of Geo-Informatics) estimates that the annual cost of financial abuse to older US citizens ranges from $2.6 billion to $36.5 billion.

Signs of Elder Financial Abuse

According to the National Council on Aging, there are many signs of elder financial abuse, including spending patterns, unpaid bills, and sudden changes to wills. Relatives and family members of older adults with investment accounts should be careful of joint bank accounts shared with a financial advisor or a broker. Moreover, suspicion should also arise if an older adult adds a broker or investment adviser as a power of attorney, beneficiary, or executor of the older adult's estate.

The Elderly Financial Abuse Case of James T. Booth

Elder financial abuse cases cover situations where elderly individuals are defrauded financially and exploited by others. These exploiters take advantage of the victims’ older ages, health conditions, vulnerabilities, and trust. These cases highlight the importance of protecting elderly individuals from any elder financial exploitation.

Elder financial abuse is seen clearly in the financial fraud case of James T. Booth. In 2019, the SEC (US Securities and Exchange Commission) accused Booth of cheating 40 investors out of nearly $4 million. Some of these investors were elderly individuals who trusted Booth with their retirement savings.

One of the victims was not a regular client of Booth’s, but an elderly family member whom Booth convinced to invest $600,000. Booth told these older clients to write checks to a company called Insurance Trends, Inc., promising that their money would be used to buy securities. However, instead of investing the funds, Booth used their money for personal benefits and to pay off previous investors.

The elderly individuals had used their brokerage account assets or given cash in their annuities to make these payments. The SEC found that Insurance Trends, Inc. was never used for legitimate purposes but was instead a front to allow Booth pocket investors' money. Kurta Law represented many investors who Booth defrauded, and they managed to recover over $10,000,000 through legal methods.

Financial Elderly Abuse

Are Fraudsters Sentenced to Jail for Financial Abuse?

Financial elder abuse is typically treated as a civil legal matter, meaning the abuser is not subject to a criminal record or jail time. The penalty involves returning the victim's money, and often paying the attorney's fees, interest, and punitive damages accrued by the victim. If elders have been deprived of their financial resources due to undue influence, theft, fraud, or asset misuse, the elderly individual victim or a family member can file charges against the abuser.

In many cases, the victim's family members seek the return of the elder individual assets without pursuing criminal allegations or charges. If an elderly person experiences financial abuse from a stockbroker, they may have the option to recover all financial loss through FINRA arbitration. This process is considered to be a more cost-effective and quicker legal process than a civil case.

Elder Financial Abuse Laws

Elder financial abuse laws are legal regulations that protect elderly citizens from financial abuse and exploitation. The main objective behind these laws is to establish clear guidelines and strict penalties for those involved in elder financial abuse. These laws provide mechanisms for reporting and investigating such cases so that older citizens' money, assets, properties, and other belongings are legally protected.
FINRA partnered with the NASAA (North American Securities Administrators) and SEC to announce a training program to assist securities firms in executing the training requirements of the Senior Safe Act. The aim is to help educate financial professionals to identify and report financial abuse and exploitation of older adults in the US.

FINRA Elderly Financial Exploitation

FINRA has created senior financial exploitation rules to provide legal firms with the tools to protect senior investors. If your stockbroker fails to uphold these rules, the next step is to contact an adult protective services or financial elder abuse attorney. Security lawyers are trained to handle these cases, and they know what questions to ask regarding financial elderly abuse.

FINRA Rule 4512

FINRA Rule 4512 requires brokerage firms to collect and maintain certain customer information for each account. This rule instructs that brokerage firms must use the required efforts to get the name and contact information of a trusted person for each customer's account. This FINRA rule is titled Customer Account Information.

FINRA Rule 2165

FINRA Rule 2165 is for the Financial Exploitation of Adults. "Specified adults" are 65 and older. If elder financial exploitation is suspected, firms can temporarily withhold a disbursement from a specified adult's account. During this process, the firm will contact all authorized parties allowed to conduct transactions in the account, unless suspicions of financial abuse or exploitation involve these authorized individuals.

FINRA Rule 3241

This FINRA Rule governs the relationship between a registered person and their customer regarding being named as a trustee, beneficiary, or executor of the customer's estate. The rule enforces certain restrictions to protect the investor’s interests. This rule also prohibits registered persons from being named executors or trustees of the customer's estate unless they meet specific criteria.

Where Should I Report Elderly Financial Abuse?

Contact your local adult protective services office if you believe an older person is being financially abused or exploited. If you suspect your investment adviser or broker is taking advantage of you, call the FINRA Securities Helpline at (844-574-3577) to review your accounts with a legal representative. Family, friends, and relatives can also use the helpline to report suspected financial exploitation or abuse. FINRA regularly investigates broker conduct based on tips from the hotline. Contact us to get more information about how to handle suspected elder financial exploitation.

What Actions Can I Take to Address Elder Financial Abuse?

Suppose you suspect financial abuse or exploitation of an elder. There are several steps you can take to legally protect the older person. Elder financial abuse is a central problem in the United States and often goes unnoticed by friends and family of the victims. Many regulatory authorities are taking steps to stop or minimize the abuse. Resources like the National Adult Protective Services Association and American Banker Association provide helpful tips for older adults, family, and friends to spot signs of elder financial exploitation and abuse.

Financial institutions play a significant and influential role in protecting financial accounts. These institutions protect the account owners from potential risks such as unauthorized access or fraud. By implementing effective security measures, financial institutions can minimize the risks to their customers’ financial accounts and allow elderly individuals to have peace of mind when managing their finances.


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Contact Veach Legal Today

If you or a loved one are the victim of elderly financial abuse, contact our team for legal assistance in Asheville, North Carolina. Our experienced securities attorney at Veach Legal specializes in elder abuse prevention services, broker misconduct, securities fraud, fraud investigations, class actions, and arbitration. We are committed to protecting your rights and restoring the assets of elderly individuals. Call us today to schedule a legal consultation.

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