Financial Elder Abuse Attorney

Each year seniors lose over $36 billion due to financial elder abuse. Elderly individuals often rely on the advice and assistance of financial professionals to grow and maintain their assets. Unfortunately, retirement funds, savings, and investments that seniors spend their entire life building can disappear or diminish at the hands of someone they trust most. 

If a financial professional has caused you or someone you know to suffer financial loss, an experienced financial elder abuse attorney can help.

What Is Financial Elder Abuse?

Financial elder abuse occurs when someone uses, or attempts to use, an elderly person’s financial resources for their own personal benefit.  Anyone in a position of trust can take advantage of an elderly person. This includes attorneys, financial advisors, trustees, caretakers, and family members. 

Florida heavily penalizes those who financially exploit elderly persons. Under Florida law, exploitation of an elderly person occurs when a trusted individual or person in a business relationship with the elderly person knowingly obtains or uses (or attempts to use) an elderly person’s funds, assets, or property with the intent to deprive the elderly person of those resources. 

Financial elder abuse can carry both civil and criminal liability for the perpetrator.

Who Qualifies as an Elder?

The threshold age of an elder varies by state. Florida law defines an “elderly person” as anyone “60 years of age or older who is suffering from the infirmities of aging.”

Common Types of Financial Elder Abuse

Financial elder abuse comes in many forms, such as theft, fraud, misuse of authority, extortion, and manipulation. Cases of financial abuse are evident across all industries, for example:

• Health and life insurance scams;
• Predatory lending, where lenders deceive borrowers into agreeing to unfair loan terms;
• Fraudulent home repairs or maintenance;
• Credit card scams; and 
• Illegitimate charitable donations. 

Professionals in the financial services industry are in an advantageous position to manipulate and exploit because they already have access to a portion of the elder’s funds. If you or someone you love has experienced any of the types of financial elder abuse described below, contact the attorneys at The Law Offices of Robert Wayne Pearce, P.A., for help recovering your losses. 

Investment Fraud 

Elders can suffer financial loss through fraudulent investment schemes that their financial advisors suggest. Elderly investors are targets for fraudulent investment schemes because perpetrators believe they are unsophisticated investors and easy to manipulate. Examples of investment fraud are: 

• Purchasing unregistered securities,
• “High return” or “risk free” investments,
• Complex investments,
• Ponzi schemes, and
• Pyramid schemes.

If your financial advisor suggests an investment that seems too good to be true, then it probably is. 

Breach of Fiduciary Duty 

Registered financial advisors have a fiduciary duty to make investment decisions in their clients’ best interests. This is the highest standard of care and imposes both legal and ethical obligations on the advisor. The fiduciary duty encompasses the duty of loyalty, the duty of care, and the duty of good faith and fair dealing. 

A breach of fiduciary duty occurs when:

• A fiduciary duty exists, through the creation a fiduciary relationship;
• The fiduciary acts contrary to the clients’ best interests, either through deliberate acts or failure to act;
• The client suffers actual financial loss; and
• The fiduciary’s breach was the direct causation of the client’s losses. 

Florida law recognizes breach of fiduciary duty as a form of exploitation of an elder. There are several ways a fiduciary can breach their duty.

Misrepresentation or failure to disclose 

As part of their fiduciary duties, financial advisors are required to disclose all material information about an investment to their clients. Misrepresenting or failing to disclose relevant information that would have affected the client’s investment decision is a breach of fiduciary duty.

Unsuitable investments

When an investor creates an account at an investment advisory firm, the client will typically complete an account opening form that includes important information about the client, such as investment objectives, risk tolerance, net worth, occupation, and income. The advisor is under a fiduciary duty to make investment recommendations that suit the client’s needs. Failure to do this is a breach of fiduciary duty. For example, if a client retires and the advisor fails to adjust the client’s portfolio investments, the advisor could be liable for financial losses.

Negligence

Negligence occurs when the advisor’s conduct falls below the industry’s established standard of care, which is designed to protect investors from an unreasonable risk of harm. An example of negligence is when the advisor fails to diversify the investor’s portfolio by over-concentration in one type of security or sector. This carries a great deal of risk to the investor because a fluctuation in that single security or sector could result in significant losses. 

Those who can show a breach of fiduciary duty may recover actual damages, such as money or assets lost, or gains not realized due to their financial advisor’s mismanagement. Often, the advisor or investment firm will also pay punitive damages to the investor as a form of punishment for their inappropriate actions.

Unauthorized Trading

Unauthorized trading is the buying, selling, or exchanging of securities without the authority, knowledge, or permission of the investor. Unless the financial advisor is given discretion to trade in a client’s account, trading without consent is a type of investment fraud. 

Investors do not have to agree to every trade their advisor recommends. It is the advisor’s responsibility to ensure that the client fully understands the benefits and risks of the recommended trade. On the other hand, it is the investor’s responsibility to review account statements and trade confirmations. Elderly investors often place a great deal of trust in their financial advisor to make investment decisions for them, which creates the perfect opportunity for financial elder abuse. 

Account Churning

Account churning is when a financial advisor makes a large number of trades in the client’s account for the sole purpose of collecting more commissions. With each trade, the investor is losing money, while the advisor is making money. This excessive trading is a way to financially exploit an investor.

What Can You Do?

Financially exploiting the elderly is detrimental in many ways. It can cause great economic loss not only for the individual and their family, but also businesses and government programs. For example, when seniors do not have the financial resources for proper medical care, they rely on federal healthcare programs, such as Medicaid.

According to a 2019 study conducted by the U.S. Consumer Financial Protection Bureau, elderly Americans who were exploited suffered an average loss of $34,200. In cases where a fiduciary caused the loss, the amount increased to $83,600 per victim. Unfortunately, financial elder abuse often goes unreported, so these numbers are likely higher. 

Talk to a Financial Elder Abuse Attorney

You should contact an attorney as soon as you believe you or someone you love has been the victim of financial exploitation. An experienced financial elder abuse attorney will carefully review what occured between you and the trusted individual to help determine what recourse you may have. Do not wait until you are in a position where your financial resources are depleted.

Report the Incident

As soon as you suspect financial elder abuse, report the incident to the financial advisor or the brokerage firm’s compliance department. If the issue is unresolved, your next option may be mediation or arbitration.

FINRA Mediation or Arbitration

The Financial Industry Regulatory Authority (FINRA) is the governing organization that creates and enforces rules for advisors and their firms and assists in resolving disputes between advisors and investors. If your financial advisor or their firm is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator, you can use FINRA’s dispute resolution services to resolve your case of financial elder abuse. 

Mediation is a voluntary, non-binding dispute resolution method that uses a neutral third party to assist in reaching a mutually agreeable solution. This option is faster and less expensive than arbitration or litigation. 

Arbitration is more like litigation in that an impartial party or panel hears arguments from both sides, analyzes the facts and evidence, and makes a final, binding decision. There is a statute of limitations to bring a claim against your financial advisor. Under FINRA Rule 12206, you have six years from the time of the financial advisor’s act to take action. However, Florida has a four-year statute of limitation for negligence claims. Therefore, it is paramount to the success of your case that you contact an experienced financial elder abuse attorney as soon as you suspect financial abuse. 

File a Lawsuit

Your final option is to sue the trusted individual for their financial abuse. Litigating these cases is complex, lengthy, and costly, but may be necessary to recover your financial losses. Speak with a financial elder abuse attorney to learn which option is best for you.