December 1 , 2016

Highlighting industry efforts to protect the nation's senior investors


Risk Factors for Fraud & Financial Exploitation
Fraud and financial exploitation are two crimes that target older adults. In 2010, a national study reported that over 5% of Americans ages 60 and older were financially exploited by a family member in the past year (Acierno et al., 2010), and in 2011, approximately 7% of adults ages 65-74, and 6.5% of adults age 75 and older were defrauded by strangers (Anderson, 2013). While these crimes share similar risk factors, elder financial exploitation is committed by people who occupy traditional positions of trust, such as friends and relatives, and fraud is typically perpetrated by strangers.

Researchers have recently identified several important risk factors for elder financial exploitation. For the older adult, these include poor physical health, cognitive impairment, and needing assistance with daily activities such as shopping, preparing meals, and managing money (Peterson et al, 2016). Lack of social support is another major risk factor. In fact, a 2014 study by Schafer and Koltai found that older people who are embedded in dense social networks have lower risk of elder mistreatment. These adults are well connected to those around them, and those around them are well connected with each other, often acting as a sort of watchdog over the actions of the others. This deters potential perpetrators from gaining too much influence over the elder.

Continue reading Dr. Marguerite DeLiema’s post on SIFMA’s Pennsylvania + Wall

Member Firm Case Study: A Sweetheart Scam
Recently, one of our clients, who is 78 years old and has a new wife who is 20 years younger, began placing frequent liquidation requests. The amounts varied, but over an eight-week period, they totaled just over $70,000.00. Concerns were raised since this client had never made such requests before and lived a simple life despite his considerable wealth. It was discovered that the requests were a result of his recent marriage and him wanting to make some improvements to his house. When asked directly as to the types of improvements, he could not be specific, repeatedly stating that his wife was the one with the decorating skills and he was not completely sure of the plans.

Continue reading this true story of a member firm’s efforts to protect its client(s) from exploitation on SIFMA’s Senior Investors Resource Center.  All names, dates and locations have been changed.


Event Recap

On October 20–21, FINRA and SIFMA hosted a two-day event dedicated to advancing senior investor protection efforts. The joint Senior Investor Protection Conference focused on strategies and solutions to help financial professionals strengthen their roles as the first lines of defense against threats to this vulnerable group of the investing public. Academic keynote, Dr. Mark S. Lachs, drew attention to the science of aging and geriatric medicine, the relationship between money, health and aging, and how age associates with financial vulnerability.  SIFMA highlighted its near-decade of work in senior investor protection efforts and the increased attention the topic has garnered from regulators, advocates and a wide array of professionals more recently.

On September 21, SIFMA hosted its inaugural Regional Senior Investor Protection Workshop in St. Petersburg, FL.  Attendees learned about the causes of cognitive decline, how to spot decline and exploitation, what steps they can take to better protect their clients, and what happens once their firms report suspected financial abuse.  The event featured collaborative efforts between member firm representatives, state officials, APS personnel and law enforcement.  Attendees also gained valuable hands-on experience and worked through fact-based investor protection scenarios.


Federal Update

FINRA Report & Hold Proposal.  On October 19, 2016, FINRA filed its proposed national Report & Hold framework with the SEC.  The SEC’s comment period closed November 28; SIFMA submitted comments.

Senior$afe Act.  On July 6, 2016, the House of Representatives passed the Senior$afe Act, S. 2216, which encourages individuals and financial institutions to communicate with the appropriate agencies when they suspect financial exploitation.

Elder Protection and Abuse Prevention Act. On September 13, 2016, SIFMA voiced its support for the Elder Protection and Abuse Prevention Act, S. 3270, which is sponsored by Senators Blumenthal, Casey, Whitehouse and Franken, as well as fifteen Representatives, and includes the Robert Matava Elder Abuse Victims Act to prevent elder abuse and exploitation and improve justice system’s response to victims in elder abuse and exploitation cases. 


State Update

Report & Hold Laws.  On June 17, Louisiana enacted Act 580, a new senior investor protection report & hold law.  It will be effective January 1; SIFMA had submitted comments on this law.  Additionally, Vermont enacted a Report & Hold rule as part of a larger rulemaking (S-2016-01) on July 1.  Since Vermont enacted a regulation instead of a statute, there are questions regarding the extent of its safe harbor.   

This brings the total states with Report & Hold laws to six (Washington State, Missouri, Delaware, Indiana, Alabama and Louisiana) and Report & Hold regulations to one (Vermont).  All are currently effective, with the exception of Louisiana.  We expect to see similar legislation in a number of states in 2017.

Connecticut Reciprocal Reporting. On June 10, the governor signed CT Public Act No. 16-149 into law, which requires the findings, in general terms, of any investigation conducted by the Commissioner of Social Services be shared with the person filing a report or complaint upon request and not later than 30 days after the investigation is completed.


Upcoming Events

Due to the success of the inaugural Regional Senior Investor Protection Workshop earlier this year, SIFMA will be hosting additional events!  Dates and locations are forthcoming.


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