An October 18, 2018, press release has outlined the SEC (Securities and Exchange Commission) report on increased efforts to protect elderly investors against fraud, identity theft, and other crimes commonly perpetrated against this vulnerable population.
Due to the industry's heavier focus on financial exploitation, an analysis of consumer complaint data from 2017 (focused on the complaints of older investors) revealed that, although the number of consumer complaints of fraud dropped in 2017, consumers reported losing more money than they did in 2016.
SEC Highlights Scams Affecting Older Investors
The report also outlined the kinds of criminal activity more likely to entangle seniors, in comparison to younger investors. Those criminal activities include the following:
- Technical support scams
- Business impostor scams
- Prizes, sweepstakes, or lottery scams
- Family/friend impostor scams
Unfortunately, the report has found that these scams are extremely effective, costing older investors tens of millions of dollars.
In 2018, the SEC prosecuted a number of enforcement cases relating to exploitation of the elderly, including:
SEC Encourages Seniors to "Spread the Word"
The FTC has launched outreach and education efforts, including the Every Community Initiative, which examines the impact of fraud on certain populations of consumers, including older adults, and a fraud prevention campaign known as the Pass it On Campaign that reaches out to older Americans to encourage them to talk about scams.
These programs are attempts to provide fraud prevention resources to older Americans so they can participate in the protection of their communities by passing on information and materials to family and friends.
Taking Steps to Protect Senior Investors
The protection of aging investors is high on the list of exam priorities for 2018.
We know that, as clients age, they may have age-related issues that result in significant decreases in the capacity to make sound financial decisions or could make them far more susceptible to financial abuse. Challenges may include diminishing cognitive function related to the onset of dementia or Alzheimer's disease.
It's advisable for financial professionals to evaluate the means through which they can protect senior investors in the event such complications develop.
The establishment of a "Trusted Contact," or language placed in various provisions included within the investment advisory contracts that allow an advisor to contact an appointed third party in the event of difficulties, helps you to fulfill your fiduciary duty.
Contact Us for Assistance
It's important that firms have a plan to assist aging clients as they face special challenges, and to protect them from becoming victims to any number of pitfalls.
For more information, contact Jacko Law Group, PC, with questions or concerns about what your firm can do to protect aging investors.
We can help you ensure that your clients are protected when they can no longer protect themselves.
- Managing Partner and CEO
Michelle L. Jacko, Esq. is the Managing Partner and CEO of Jacko Law Group, PC, which offers corporate and securities legal services to broker-dealers, investment advisers, investment companies, hedge/private funds and ...
Add a comment
- Investment Adviser Wearing Multiple Hats Charged by SEC for Defrauding Clients
- Charging Fees for Inactive Accounts can be as Problematic as Churning
- SEC: Prudential Failed to Disclose Conflicts of Interest to Fund Boards
- SEC Charges Investment Bank Junior Analyst with Insider Trading
- SEC Files Charges in Fraudulent Token Manipulation Scheme
- OCIE Risk Alert: Guidance for Compliance, Supervisory and Disclosure Procedures
- Jury Returns Verdict for SEC in Case Against Broker Charged with Fraudulent Excessive Trading
- SEC Charges Investment Advisor with Defrauding Clients by Failure to Disclose Conflicts of Interest
- Charging Clients Fees Not Disclosed in Form ADV: State Street Settles with SEC for $88 Million
- The CFP's Revised Code of Ethics and Standards of Conduct Takes Effect
- Office of Compliance Inspections and Examinations (OCIE)
- Investment Advisers
- Form U5
- Ponzi Scheme
- Advisers Act
- Aging Clients
- Regulation Best Interest
- Due Diligence
- Virtual Currency
- Dodd-Frank Act
- Transition Services
- Private Equity
- Private Funds
- Personally Identifiable Information (PII)
- Government Shutdown
- Hedge Funds
- Regulatory Examinations
- Risk Alert
- Securities Law
- Social Media Marketing
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Broker Protocol
- Wells Fargo
- Policies and Procedures
- Securities and Exchange Commission (SEC)