What is Financial Elder Abuse: The Signs You Should Look Out For

Growing up, one of the lessons we’re all taught is to respect our elders. Unfortunately, many people fail to take this to heart. Unscrupulous family members and other bad actors often take advantage of senior citizens, especially when it comes to their finances. According to one study, financial elder abuse accounted for roughly 18% of elder abuse reports. However, the actual percentage is likely much higher; only about 1 in 44 financial abuse cases is ever reported. Because many elderly people live off of their investments, the consequences of this type of abuse can be particularly extreme. The best way to protect our elderly family members is to know the signs of financial elder abuse. By recognizing the abuse as soon as possible, we can hopefully prevent irreversible damage to their finances. What Is Elder Financial Abuse? Elder financial abuse is theft or mismanagement of an elderly person’s assets. These may include real estate, bank accounts, or other property that belongs to the elderly person. Because the abuser is often a close family member, or trusted financial advisor, elder financial abuse frequently goes unnoticed. Investment Losses? Let’s talk. or, give us a ring at 561-338-0037. Sign #1: Unusual Bank Account Activity As they get older, many people grant financial powers of attorney to their spouse or adult children or trusted financial advisors. While this is perfectly normal, it opens up the possibility that the designated person may abuse that power. If you suspect elder financial abuse, pay close attention to the elderly person’s bank accounts and investments in their brokerage accounts. Withdrawals, transfers, or other suspicious activity like new or inactive accounts suddenly becoming active are red flags. The elderly person may be making these transfers themself, but it’s always good to be sure, since it could be for the wrong reasons (like the internet scams discussed below). Keep an eye on their investments as well. An elderly person’s portfolio is typically structured to provide a livable income off interest alone through low-risk investments. Keep an eye out for restructuring of investments to riskier funds or unexplained “cash outs.” Sign #2: Suspicious Internet Activity Over the past few years, there has been a drastic increase in the number of online scams targeting elderly people. Because elderly people are more trusting and less able to distinguish a scam from a legitimate venture, scammers frequently target them with fake tech support calls and the like. One of the most common online scams involves the scammer posing as a lover, friend, or family member online. After contacting the elderly victim, the scammer then requests money for plane tickets or some kind of emergency. This sign may be impossible to notice without speaking to the potential victim. Be wary if they mention someone new they met online or if you notice suspicious financial activity initiated by the victim. Sign #3: Missing Food or Unpaid Bills Ordinarily, caregivers or family members will make sure that an eldery person’s home is stocked with food and that bills are paid on time. Especially in a world with automatic bill payments, aging parents shouldn’t have to worry about paying their bills on time. A lack of food in the house and unpaid bills are indicators that that money is going elsewhere. Sign #4: Frequent Requests for Money by Someone Close to the Victim If someone makes frequent demands for money, that could be an indicator of financial exploitation. Anyone from neighbors to adult children may try to make frequent requests for money because they know the victim may have a poor memory or may have difficulty saying no.  Keep in mind that elder financial abuse like this is often subtle. Demands may not always be for large amounts of cash; this sign also includes polite requests for small amounts here and there. Over time, however, those “small amounts” can become exploitative. Sign #5: Payment for Unnecessary Services Door-to-door salesmen and “cold callers” may try to a upsell your elderly family member on services they don’t want or need. One common example of door-to-door sales abuse is roof repair or landscaping work. Cold callers barrage elderly at home with the next best investment in gold, silver, diamonds, and the next supposed Apple, Amazon, or Nextflix investment opportunity  to get into before its too late! These scams can take many different forms and may be difficult to spot. Sign #6: Threats or Coercion It may be difficult to imagine, but people may threaten their elderly family members to obtain money. These threats usually do not involve force, but rather things like, “I will put you in a home” or “I will stop visiting you.” If you don’t buy this stock, I’ll never call you again with any investment opportunities.  The abuser may also instruct the victim not to tell anyone what is happening. As a result, you’ll often have to pay close attention to spot this sign of elder financial abuse. Watch for a change in the elderly person’s demeanor or mood, especially around a suspected abuser.  What to Do If You Suspect Elder Financial Abuse If you suspect your loved one is the victim of elder financial abuse, there are a couple things you can do. If there is a health emergency, call 911 immediately; calling state adult protective services may also be appropriate in some circumstances. In most cases, your next step should be contacting a financial elder abuse attorney. They can provide legal advice and support to help stop the abuse and may be able to help the victim recover lost assets. Elder Financial Abuse and Financial Fraud Attorneys At the Law Offices of Robert Wayne Pearce, P.A., we have the experience and resources necessary to properly handle your elder financial abuse claim. We’ve helped hundreds of clients with securities and investment fraud of all kinds and are prepared to give you the professional, dedicated representation you need. Contact us today through our website or by phone at 800-732-2889 for a free consultation.

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Securities Fraud Explained: What You Should Know as an Investor

Investors trust their financial advisors to make important and wise decisions regarding the management of their investment portfolio. Financial advisors hold a position of trust with their clients, and clients expect their advisor to act with the client’s goals in mind. Unfortunately, advisors frequently violate the trust of their clients by committing various forms of securities fraud. It is important to note that suffering losses on your investments, by itself, is not a form of securities fraud. Securities fraud involves the deception of investors or the manipulation of financial markets through illegal methods. If you suffered investment losses but don’t know if you have a claim for securities fraud, our securities fraud lawyers at The Law Offices of Robert Wayne Pearce, P.A., are ready to help. Contact us today to get started on your case. What Is Securities Fraud? Securities fraud, also known as investment fraud and stock fraud, is the deception of investors or the manipulation of financial markets through illegal methods. Investors who suffer losses as a result of securities fraud can seek to recover their losses. Investment Losses? Let’s talk. or, give us a ring at 561-338-0037. Common Forms of Securities Fraud Securities fraud occurs in multiple different ways, making it even more difficult to recognize. Victims of securities fraud often suffer steep losses as a result of the fraud. Fortunately, victims of securities fraud can seek to recover their losses. So, what is securities fraud? Below are some of the most common forms of securities fraud.  Misrepresentations and Misleading Statements Misrepresentation is the most common type of securities fraud. It involves a false statement about an investment in a company; for example, a company that supposedly has earnings, a revolutionary product, or multi-million dollar contract when it has none of those assets. Misleading statements arise by omission; such as, using the same examples, when the financial advisor fails to tell you the earnings surprise was a one time past event, the revolutionary product can’t be patented, or the multi-million dollar contract is with another company about to file bankruptcy. Undoubtedly, those missing facts would have made all the difference to you in making your investment decision. The fraudster doesn’t care, he/she lies or misleads you to just get you to part with your money so he/she makes a commission. If you relied upon that intentionally false statement or misleading statement and made that investment, you have the right to claim securities fraud under federal and state statutes as well as ordinary common law fraud. But the securities fraud statutes usually have statutory remedies, including, prejudgment interest on the full purchase price from the date of purchase and attorney fees, to fully compensate you for your loss. The only problem with securities fraud statutes is they generally come with short statutes of limitation and so, you need to act fast and file suit quickly to take advantage of them. Ponzi-Like Schemes Ponzi schemes involve promises of high returns with little risk for investors, a staple of many forms of securities fraud. However, instead of issuing returns to investors out of profits, the funds of new investors are paid to early investors. Thus, Ponzi scheme victims receive guarantees of returns regardless of market conditions.  Ponzi schemes fall apart once there are no new investors providing funds. Companies operating Ponzi schemes focus the majority of their efforts into advertising to new investors to keep the scheme afloat.  Well-known financier Bernie Madoff was convicted of running the largest Ponzi scheme in history after evidence showed that Madoff falsified trading reports to indicate clients were earning profits on investments that did not exist. Madoff received a 150-year sentence in federal prison after pleading guilty. Embezzlement Embezzlement refers to the misappropriation of assets by a person entrusted with those assets. An embezzler possesses the assets lawfully at the outset, but once the assets are used for unintended purposes, embezzlement has occurred.  For example, financial advisors placed in charge of clients’ accounts possess authority to conduct transactions in the accounts, subject to some limitations. A financial advisor who steals assets entrusted to him or her by a client commits embezzlement.  Advance Fee Schemes Advance fee schemes target all kinds of victims and are becoming more prevalent with the rise of internet scams. Con artists operating advance fee schemes require the victim to pay an “advance fee” in anticipation of receiving something—such as a service, a product, or an investment opportunity—of greater value in return. The scheme operator convinces the victim to provide the fee, then subsequently informs the victim that he or she is ineligible for whatever was offered after the fee is paid. The victim is unable to recover the fee that was paid. To avoid suffering losses due to an advance fee scheme, take precautions before conducting business with a company you have never heard of. Providing any payment amount to a person or company you are unfamiliar with is a risky practice. When in doubt, speak to an experienced securities fraud attorney to determine whether the investment opportunity is fraudulent.  Pump and Dump Fraud A pump and dump scheme, also referred to as market manipulation, occurs when a group of fraudsters post content on the internet enticing investors to purchase a stock as soon as possible.  The fraudsters claim to have insider information regarding the product that will result in a jump in the share price of the stock. The fraudsters post content in multiple forums in an attempt to entice as many new investors as possible. Once investors purchase shares of the stock, the fraudsters sell their shares, resulting in a dramatic dip in the share price. New investors, lacking awareness of any fraudulent conduct, suffer the losses.  Pump and dump schemes began primarily through cold calling. However, the internet and social media provide fraudsters a more efficient way to attempt the scheme. Insider Trading Insider trading involves the use of “non-public, material information” to buy or sell stocks. Non-public material information includes any information that could substantially impact an investor’s decision...

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Securities Law in 2021: The Definitive Guide

The law governing securities evolves constantly to keep pace with changes in the industry. Regulatory agencies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) F/K/A National Association of Securities Dealers (NASD) enforce various rules and regulations designed to promote fair and full disclosure of material facts related to financial markets and individual securities transactions. This guide provides a surface-level overview of the securities laws in the United States and what those laws mean for you. Important Terms in Securities Law A security is an intangible financial instrument that entitles its owner to claims of ownership on assets and earnings of the issuer or the voting power that accompanies the claims. Securities exist in the form of: Notes, Stocks, Treasury stocks, Bonds, Certificates of interest, Collateral trust certificates, Transferable shares, Investment contracts, Voting trust certificates, Certificates of deposit for a security; or A fraction, undivided interest in mineral rights. Stock markets in the United States collect trillions of dollars on investments through the securities trade.  The individuals buying or selling securities are referred to as investors. The term “retail investor” refers to an individual who typically purchases securities from a broker and, in most cases, does not purchase a large quantity of securities. The term “institutional investor,” on the other hand, often refers to a company investing large sums of money in securities.  The company buying and selling securities for investors is known as a broker-dealer. Firms like Morgan Stanley and Merrill Lynch employ brokers to serve clients by buying and selling securities on their behalf.  History of Federal Securities Law Prior to the Great Depression, the United States lacked an expansive securities regulation at the federal level. As a result, companies falsified and misrepresented financial information without fear of consequences. During the 1920s, the stock market expanded rapidly as the U.S. economy grew and stock prices reached record highs. Between August 1921 and September 1929, the Dow increased by 600%. Excitement surrounding the stock market fueled retail investors to get involved. Many retail investors purchased stocks “on margin,” meaning they only paid a small portion of the stock price and borrowed the remaining amount from a bank or broker. Despite the audacity of the claim, many believed that stock prices would continue rising forever. In early September 1929, stock prices started to decline. Not yet alarmed, many investors saw an opportunity to buy into the stock market at a lower price. The Stock Market Crash of 1929 On October 18, 1929, stock prices decreased more significantly. October 24 signaled the first day of panic among investors. Known as “Black Thursday,” a record 12,894,650 shares were traded throughout the day. On October 28, the Dow suffered a record loss of 38.33 points, or 12.82%. The following day—”Black Tuesday”— held more devastating news for investors as stock prices dropped even more. 16,410,030 shares were traded on the New York Stock Exchange in a single day. The 1929 stock market crash resulted in billions of dollars lost and signaled the beginning of the Great Depression. The Aftermath In the wake of the crash, the U.S. Senate formed a commission responsible for determining the causes. The investigation uncovered a wide range of abusive practices within banks and bank affiliates and spurred public support for banking and securities regulations. As a result of the findings, Congress passed the Banking Act of 1933, the Securities Act of 1933, and the Securities Exchange Act of 1934. New York County Assistant District Attorney Ferdinand Pecora finalized the final report and conducted hearings on behalf of the commission and was later selected as one of the first commissioners of the SEC. Federal Securities Laws and Regulations The American banking systems suffered significantly in the wake of the stock market crash, as approximately one in three banks closed their doors permanently. Following the crash, the U.S. government imposed tighter rules and regulations on the financial industry. As securities evolve, regulatory agencies are responsible for imposing up-to-date regulations to protect investors. Banking Act of 1933 The Banking Act of 1933 (the Banking Act), implemented by Congress on June 16, 1933, signaled the start of many changes in the securities industry. First, the Banking Act established the Federal Deposit Insurance Corporation (FDIC), created to provide deposit insurance to depositors in United States depository institutions in an effort to restore the public’s trust in the American banking system.  Glass-Steagall provisions Four sections of the Banking Act—referred to as the Glass-Steagall legislation—addressed the conflicts of interest uncovered by Ferdinand Pecora during his investigation into the stock market crash of 1929. The Glass-Steagall legislation sought to limit the conflicts of interests created when commercial banks are allowed to underwrite stocks and bonds. In the previous decade, banks put their interest in promoting stocks and bonds to their own benefit, rather than considering the risks placed on investors. The new legislation banned commercial banks from: Dealing in non-governmental securities for customers; Investing in non-investment grade securities on behalf of the bank itself; Underwriting or distributing non-governmental securities; and Affiliation or employee sharing with companies involved in such activities. On the other side, the legislation prohibited investment banks from accepting deposits from customers. Deterioration and reinterpretation of Glass-Steagall provisions The separation of commercial and investment banks proved to be a controversial topic throughout the financial industry. Only two years after passing the Banking Act, Senator Carter Glass—the namesake of the provisions—sought to repeal the prohibition on commercial banks underwriting securities, stating that the provisions had unduly damaged securities markets.  Beginning in the 1960s, banks began lobbying Congress to allow them to enter the municipal bond market. In the 1970s, large banks argued that the Glass-Steagall provisions were preventing them from being competitive with foreign securities firms. The Federal Reserve Board reinterpreted Section 20 of the Glass-Steagall provisions to allow banks to have up to 5% of gross revenues from investment banking business. Soon after, the Federal Reserve Board voted to loosen regulations under the Glass-Steagall provisions after hearing arguments from Citicorp,...

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