When Stockbroker Fraud Involves Elder Abuse

Tacoma, WASenior citizens may rely more and more on professionals to help manage their affairs, but doing so may open them up to stockbroker fraud, which in such cases could also amount to elder abuse. Some unethical stockbrokers will commit stockbroker investment fraud against elderly clients, putting the clients not only at risk of losing their money, but also in a position where that money cannot be regained. A recent incident of stock fraud highlights the issue.

According to KOMO News (12/27/12), a former stockbroker has been sentenced to five years in jail for stealing more than $1 million from an elderly man who was also his client. Prosecutors alleged the stockbroker was an investment advisor for the client, and was later given power of attorney over the man. Among the money that was reportedly stolen were more than $650,000 from a Charles Schwab account, almost $600,000 in checks written from the client's accounts and almost $250,000 in checks for estate services after the client died.

The stockbroker's registration was revoked in 2009. So far, according to prosecutors, none of the stolen money has been returned.

Elderly investors are at risk of coming up against unethical stockbrokers who will steal their clients' money for their own purposes. In some cases, they do so by manipulating the client into giving them power of attorney, gaining access to vital accounts and transferring money to themselves, spending it on luxurious items and trips.

Some instances of stockbroker elder abuse wind up in FINRA (Financial Industry Regulatory Authority) arbitration. On November 15, 2012, FINRA's Investor Education Foundation made a presentation to the Senate Special Committee on Aging. At the time Gerri Walsh, president of the FINRA Investor Education Foundation, noted that FINRA has been focused recently on issues that affect older investors, especially those at or near retirement age.

Research conducted by FINRA to learn more about senior investment fraud shows that victims of senior investment fraud do not necessarily fit the typical investment profile.

"Instead of being isolated, frail and gullible, fraud victims tended to be married, college-educated males with above-average incomes and above-average levels of financial literacy," Walsh noted. Furthermore, schemes to victimize seniors tended to be highly sophisticated and involve influencing the senior.

Senior investors who are victims of financial elder abuse can file a FINRA arbitration to recover their lost money.