Recently, FINRA has focused on the increase in cases involving the abuse of elderly investors by investment advisors and registered representatives. This has also become a focus of Investment Fraud Attorneys. Two weeks ago , as reported by Investment News FINRA filed charges against a Financial Advisor who tried to inherit 1.8 Million from his client who was suffering from Alzheimer’s. Advisers taking advantage of the elderly is nothing new, but as the population ages and more and more are afflicted with psychological issues, such as Alzheimer’s, investment firms and brokers will need to create guidelines so as to avoid issues that are unique to such customers, or they will face huge liability. As someone who has a family member personally afflicted with Alzheimer’s I can attest to the toll the disease takes on one’s thought process and ability to make proper day to day decisions, let alone financial decisions. Ever since our unique April 2011 2.4 million dollar arbitration award against Morgan Stanley Smith Barney* on behalf of what was formerly a highly sophisticated senior officer of such firm who suffered from dementia, which was one of the largest FINRA awards issued that year to an investor, it has been clear that firms and brokers must tread carefully when it comes to not only not taking advantage of the elderly, but in not being negligent when it comes to their unique needs. If a family comes into an investment firm for assistance, no matter how sophisticated the particular investor once was, if he or she is inflicted with Alzheimers or Dementia, that sophistication is gone and you can throw the profile sheet out the window when it comes to defending any future arbitration claim by an investment fraud attorney for suitability, authorization or otherwise. At the same time it is critical that the family early on makes sure that the firm and the broker involved is made aware, ideally in writing via email, letter or otherwise that the investor is suffering from dementia or alzheimer’s, so that the firm cannot claim that it did not know. While some family members are reluctant to reveal this, it is essential for any claim that needs to be filed in the future. These cases are not simple, and in the one above which we pursued in Boca Raton Florida we introduced medical records and a medical expert to testify about the client’s condition from before and after the account opening. The highly experienced and well known brokerage’s attorney assisted in making our case by attempting to cross examine our client, only to serve to further demonstrate that our client was far from sophisticated, due to his mental condition resulting in the large award.
Since 2007 FINRA has issued numerous releases and Notices to Members related to elderly investors and advisors should understand and abide by them. In recent years FINRA has warned the elderly against the hard sell at various “free lunch” investment seminars, they have provided a toll free securities investor help line for seniors, and they have warned against the use of senior designations by brokers.
When in doubt as to a possible scam, or if you believe a broker may have taken advantage of an elderly family member suffering from Alzheimer’s or Dementia it is critical to retain a qualified Investment Fraud Attorney as soon as possible. As various statutes of limitations apply to all cases, one cannot afford to sit and wait. We owe it to our parents and our fellow elderly investors to do the right thing by them.
Stuart D. Meissner Esq.
Toll Free 866-764-3100
Office locations in Manhattan, Nyack, N.Y., Texas, New Mexico, Florida, California, Boston, Washington DC, London, & Israel
*Past results cannot guarantee future outcomes.