The SEC Offers More Training To Combat Financial Losses For Seniors

The recent case of Beverly Schottenstein Vs. JP Morgan and the Schottenstein Brothers was a very strong reminder of the problem of elder abuse. Specifically, financial abuse among elderly people who, in some cases, may not understand they’ve been defrauded.

While Ms. Schottenstein knew her grandsons were defrauding her, she was able to get justice (and a financial settlement) in her case. Other elders that don’t have as much money or realize they are being defrauded may not be as fortunate.

Financial institutions now have the opportunity to stop a case of elder financial fraud before it happens.

Elder Financial Fraud By The Numbers

The FBI’s Internet Crime Complaint Center (ICCC) in their Elder Fraud Report for 2020, reports that more than 105,000 victims over the age of 60 lost $1 billion dollars through various schemes just last year. These scams can include:

Extortion
Non-payment/non-delivery (more prevalent since the increase of online ordering during the pandemic)
Tech support (i.e., “I’m calling from Microsoft about the virus on your computer”)
Identity Theft
Phishing (social engineering to gain access to finances)
Spoofing (emails impersonating a legitimate company such as Microsoft, Dell, Amazon, PayPal, etc.)
Romance or confidence fraud (over $281 million in losses in 2020)
Personal data breach
Misrepresentation
Government impersonation (such as an IRS agent)
Lottery/Sweepstakes/Inheritance
Investments (sometimes combined with romance scams)

Another report from the Federal Trade Commission indicates that consumers 60 and over were the least likely to report a case of fraud, and had higher than median dollar losses than those under 60. Phone scams resulted in the biggest aggregate reported losses in these adults, especially to those over the age of 80.

It’s difficult for seniors and their families to keep up with the ever-expanding list of different frauds aimed at people over 60. But seniors may now have someone else looking out for them—their brokerage firm.

More Protection For Seniors

People who fall prey to different types of frauds either give out bank information to the individuals or liquidate their investments to pay them, including their securities and retirement funds. Victims are particularly quick to liquidate when a family member is involved and says they “need help now.”

To help combat the financial exploitation of seniors, the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and North American Securities Administrators Association (NASAA), have joined forces to offer a new training program to securities companies to better protect their over-65 clients.

Why Financial Institutions Should Be Involved

Brokers, investment advisors and transfer agents are the first to see these types of transactions. They can also be the first line of defense to stop it before the senior is defrauded. Family members and other overseers will likely not discover the losses until long after the money is gone. There may be little or no way to get the money back at that point.

The Senior Safe Act was signed into law in 2018. The act offers immunity to an institution or employee who reports a suspected case of exploitation to a “covered agency,” such as:

Law enforcement
A state or local agency tasked with overseeing adult protective services (each state is different, so it’s important to check local rules and laws)
A state financial regulatory agency, including state securities or a state insurance regulator
Federal agencies such as the FDIC, Federal Reserve, and others
FINRA and the SEC, who both have web pages for senior investors

The immunity is only available if the individual and their employer have taken training to recognize the fraudulent activity. The training is now available free and online.

Training For Institutions

In conjunction with the Senior Safe Act, the SEC, FINRA and NASAA are offering training to individuals who work for:

Broker-dealers and transfer agents
Investment advisers
Credit unions and depository institutions
Insurance companies and agencies

This training instructs employees on how to identify fraud and how to properly report it. The suspected activity must be made “in good faith” and “with reasonable care.”

The training presentation is available online:

On NASAA’s website at https://www.nasaa.org/industry-resources/senior-issues
On NASAA’s Serve Our Seniors website at http://serveourseniors.org/about/industry
On the SEC’s website at https://www.investor.gov/additional-resources/information/seniors
And on FINRA’s website at https://www.finra.org/rules-guidance/key-topics/senior-investors

The AARP has also instituted its own program, called BankSafe, also intended to thwart potential exploitations by training bank tellers to spot the same type of fraud during in-person transactions.

Contact Our Firm If You Or A Loved One Has Been A Victim Of Elder Investment Or Financial 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 abuse and exploitation laws. If you or a loved one has lost money investing due to violation of elder 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. 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.