What is a Financial Exploitation?

Older investors are particularly vulnerable to financial fraud because their financial decision-making ability can decrease with age. Seniors are more susceptible to financial exploitation schemes that have defrauded them out of their hard earned savings. At times, the perpetrator of the elder fraud is a home care worker or a stranger. But it is deeply troubling when the fraudster is someone who has a fiduciary duty to act in the elder investor's best interests, such as a broker, financial advisor, or legal guardian. 

Elder financial abuse is typically committed by trusted persons who are charged with protecting the senior investor’s money by overseeing and investing the investor's IRA, brokerage account, or other saving.  Most victims of financial exploitation scams lose a staggering amount of money. 

You may have an elder financial misconduct claim if a bad broker misused, misappropriated or stole your money. The tactics perpetrators use to commit financial exploitation are different from those of financial fraud. They usually involve deceitful efforts to keep the victim from having access to their funds or hiding information about their finances. 

The Financial Industry Regulatory Authority (FINRA) has highlighted issues relating to the protection of senior investors from falling prey to financial exploitation, including:

• the types of securities products or investments sold to senior investors

• suitability of securities products or investments sold to senior investors

• use of senior designations

• brokers and brokerage firms’ advertising and marketing to senior investors

• types of customer account information required to open accounts for senior investors

• disclosures provided to senior investors

• supervision of brokers as they interact with senior investors

Investment Frauds Targeted at Senior Investors 

Many of Florida’s elderly population hold significant wealth and are at high risk of being targeted for financial exploitation. Below are examples of tactics bad brokers use to scam seniors and unsuitable investments they recommend to seniors and retirees. 

• Churning: Occurs when there is excessive trading in senior investor's brokerage account to generate commissions for themselves.

• Negligence: This doesn't necessarily involve the intent to commit elder investment fraud or other willful misconduct. Rather, the broker acted carelessly, cluelessly, or failed to act at all, causing the older investor to suffer financial harm.

• Overconcentration: Occurs when the investments in a senior investor's portfolio has too much of one type of investment putting the senior at greater risk of loss due to the broker’s failure to diversify.

• Unauthorized Trading: Unauthorized trading in a senior investor's brokerage account without their knowing or consent.

• Unsuitable Investments: Making risky investments in a conservative senior's brokerage account that are inappropriate for their risk tolerance level or goals to generate high commissions for the broker or financial advisor, such as business development companies (BDCs), collateralized loan obligations (CLOs), collateralized debt obligations (CDOs), exchange-traded funds (ETFs), non-traded real estate investment trusts (non-traded REITs), oil and gas investments, or structured products.

Florida Law Prohibits Elder Financial Exploitation 

Under Florida’s elder financial exploitation laws, a broker or financial advisor in a position of trust with a senior investor breaches their fiduciary duty fail to act in the elder investor's best interests. Here are some ways a broker or financial advisor can breach their fiduciary duty:

• Unauthorized taking, sale, or transfer of an elder’s funds by a trusted person

• Wasting, embezzling, or intentionally mismanaging an elder’s funds

• Misappropriating, misusing, or transferring money from an elder’s account without their knowing   

• Failing to properly use an elder’s funds for their intended purpose

For Legal Help Contact Our Firm 

Riera Law represents victims of financial exploitation who were scammed through a trusted stockbroker or financial advisor who works for a securities brokerage firm. If you have been scammed, it is crucial to take legal action as soon as possible to recover your losses. If you have been fraudulently victimized, we can assist you. Contact us or call us today at 305-204-9779 for a free case evaluation.