FINRA Tips for Spotting and Preventing Elder Financial Abuse
Elder financial abuse is a subject that has increasingly drawn scrutiny by regulatory bodies. The Financial Industry Regulatory Authority (“FINRA”) and the Securities Exchange Commission (the “SEC”) have published numerous investor alerts, regulatory guidance, and primers on the elder financial abuse. FINRA has even hosted panels to educate elderly investors and financial representatives on how to combat elder financial abuse. Our firm has launched a website targeting elder financial abuse as well at www.elderfinanci
Most recently, as part of FINRA’s 2017 Regulatory and Examination Priorities Letter, the regulatory body announced its focus on senior investors. Among other things, FINRA will focus on the suitability of speculative and/or complex investment products recommended to elderly investors. But a big question for most elderly individuals and their loved ones is how they can avoid elder financial abuse in the first place. An SEC guide for seniors to protect themselves from elder financial abuse lists the following among other items to protect elderly investors:
Ask Questions and Check Out the Answers
According to the guide, fraudsters prey on elderly investors’ trust and their failure to investigate on their own before they invest. Simply asking the investment promoter for more information or for references is not enough, as these fraudsters have no incentive to give accurate information. Take the time to do your own research and talk with trusted friends and family before investing. Make sure to understand the investment, the risk attached, and the company’s history. Lastly, if the investment sounds too good to be true, it probably is.
Take Your Time – Don’t be Rushed into Investing
Sometimes making money on Wall Street is a matter of timing – just because someone you know made money, or claims to have made money, does not mean you will too. If an investment is pitched as a “once-in-a-lifetime” opportunity, especially if the promoter bases his recommendation on “inside” or other confidential information, you should be wary. Remember that a fraudster wants you to think as little about the specifics of the investment because you might figure out the scam.
Be Wary of Unsolicited Offers
According to the SEC guide, be especially careful if you receive unsolicited communication about a company or investment opportunity or see either praised on an internet bulletin board and can find no current financial information about the company from independent sources. Many fraudsters use email, faxes and internet postings to tout thinly-traded stocks in the hopes of creating a buying frenzy that will push the share price up so that they can sell their shares. Once the fraudsters dump their stock and quit promoting the company, the share price quickly falls. This is known as a pump-and-dump scheme. Be extra wary if the investment at issue is a foreign or “offshore” investment. When you send your money abroad, it’s more difficult to find out what happened and locate your money.
Don’t Lose Sight of Your Investments
The SEC guide states that you should not rely on a financial representative who says “leave everything to me.” Always monitor the activity in your account and request regular statements. Also, never feel uncomfortable questioning any trading activity that you don’t understand. This is your money. You should also keep all records of conversations that you have about any of your investments.
Contact Our Firm if You or a Loved One Has Been a Victim of Elder Investment Fraud
Silver Law Group has represented and is currently representing elder investors who have lost much of their life savings due to Wall Street greed and disregard of elder financial abuse and exploitation laws. If you or a loved one has lost money investing due to violation of elder financial abuse and exploitation laws, you may be able to recover some or all of your losses.
Silver Law Group represents the interests of investors and senior investors who have been the victims of investment fraud and elder financial abuse. If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.