Elder Abuse Awareness Day, observed annually on June 15th, is a critical opportunity to shed light on the unfortunate and often underreported issue of elder abuse. At Bakhtiari & Harrison, we are committed to protecting the most vulnerable members of our society, particularly senior citizens who may fall victim to financial exploitation by unscrupulous financial advisors. As a law firm with a strong focus on securities law and elder financial abuse, we understand the devastating impact that such exploitation can have on the lives of seniors and their families.
Understanding Financial Elder Abuse
Financial elder abuse occurs when a trusted individual, such as a financial advisor, takes advantage of a senior citizen’s assets for personal gain. This can involve unauthorized trading, fraudulent investments, high-fee products, or outright theft. Senior citizens are often targeted due to their accumulated wealth, potential cognitive decline, and sometimes limited understanding of modern financial products.
The consequences of financial elder abuse can be devastating, leading to significant financial loss, emotional distress, and a diminished quality of life. It is crucial for family members, caregivers, and legal professionals to be vigilant and proactive in identifying and preventing such abuse.
Regulatory Landscape: FINRA and State Laws
The Financial Industry Regulatory Authority (FINRA) has issued several notices to its members regarding the protection of senior investors. These notices highlight the responsibilities of financial advisors to act in the best interests of their clients and to be particularly mindful of the vulnerabilities of senior citizens.
FINRA Regulatory Notices
- FINRA Regulatory Notice 07-43 (September 2007): This notice provides guidance on the suitability of recommendations to senior investors. It emphasizes the importance of understanding the unique needs and risk tolerances of senior clients and ensuring that recommended investment products are suitable for their financial situation.
- FINRA Regulatory Notice 17-11 (March 2017): This notice introduces the concept of a trusted contact person. It encourages firms to ask senior clients to designate a trusted contact person who can be consulted in case of suspected financial exploitation or if there are concerns about the client’s mental capacity.
- FINRA Regulatory Notice 20-34 (October 2020): This notice highlights the importance of heightened supervision for senior clients. It recommends that firms implement specific supervisory procedures to monitor the accounts of senior investors, including regular reviews of account activity and heightened scrutiny of transactions.
Best Practices for Protecting Senior Investors
To prevent financial elder abuse, financial advisors and firms should implement several best practices:
- Designating a Trusted Contact Person: Encourage senior clients to designate a trusted contact person who can be consulted if there are concerns about the client’s financial transactions or well-being. This provides an additional layer of protection and ensures that someone trustworthy is aware of any suspicious activity.
- Regular Account Reviews: Conduct regular reviews of senior clients’ accounts to identify any unusual or unauthorized activity. This helps to detect potential abuse early and take corrective action before significant harm occurs.
- Enhanced Communication: Maintain open and transparent communication with senior clients and their families. Clearly explain investment strategies, risks, and fees to ensure that clients fully understand their financial situation.
- Training and Awareness: Provide training to financial advisors and staff on the specific needs and vulnerabilities of senior clients. This includes recognizing signs of cognitive decline and understanding the regulatory requirements for protecting senior investors.
State Laws Protecting Senior Citizens
In addition to FINRA’s regulatory framework, many states have enacted laws specifically designed to protect senior citizens from financial exploitation. These laws often include provisions for reporting suspected abuse, civil and criminal penalties for perpetrators, and restitution for victims.
California Welfare and Institutions Code
California has been at the forefront of enacting laws to protect its senior citizens. The California Welfare and Institutions Code includes several provisions aimed at preventing and addressing elder abuse.
- Elder Abuse and Dependent Adult Civil Protection Act (EADACPA): This act provides a civil remedy for financial elder abuse, allowing victims to recover compensatory and punitive damages, as well as attorney’s fees and costs. It covers a wide range of abusive behaviors, including fraud, embezzlement, and undue influence.
- California Penal Code Section 368: This section makes it a crime to financially exploit a senior citizen or dependent adult. It includes provisions for enhanced penalties if the victim suffers great bodily harm or death as a result of the abuse.
- California Welfare and Institutions Code Section 15630: This section mandates that certain professionals, including financial advisors, report suspected financial abuse of elders and dependent adults. Failure to report can result in fines and other penalties.
Protecting Seniors: A Call to Action
Elder Abuse Awareness Day serves as a reminder of the importance of protecting our senior citizens from financial exploitation. At Bakhtiari & Harrison, we are dedicated to advocating for the rights of senior investors and holding financial advisors accountable for their actions. We urge families, caregivers, and professionals to be vigilant in identifying and preventing financial elder abuse.
If you suspect that a senior citizen in your life has been a victim of financial exploitation, we encourage you to take immediate action. Contact our experienced team at Bakhtiari & Harrison for a free consultation. Together, we can ensure that our senior citizens receive the protection and justice they deserve.
Call us at 310.499.4732 to learn more about how we can help. Let’s work together to create a safer and more secure future for our senior citizens.