Unfortunately, instances of elder abuse are becoming more and more common. When we typically think of elder abuse, we may think of nursing home or caregiver abuse or neglect (such as the physical abuse that comes from being struck by a caregiver or the bedsores and malnourishment that come from neglect). A more insidious and more difficult form of abuse comes from the investment professional who seeks to take advantage of the elderly client. The elderly, as a group, tend to be more susceptible to high pressure sales tactics, more trusting of well dressed “professionals” and less understanding of securities transactions. They also tend to blame themselves when their accounts incur losses. Even if they suspect fraud or misconduct, embarrassment or fear may prevent an elderly individual from informing family members.
All of the categories of fraud and misconduct discussed herein occur with the elderly. In addition, they are frequently the targets of thefts and embezzlements. They may be sold unnecessary or inappropriate financial products such as insurance or other investments that simply do not make sense. For the vast majority of the retired population, appropriate investments would include diversified mutual funds or money market accounts, bonds, certificates of deposits, etc. Excessive trading is almost never appropriate.
A variety of state and federal laws do exist to protect the elderly from abuse; the problem comes in knowing if abuse has occurred. There are certain warning signs that the elderly investor and their family should look for. Some of the questions that should be asked are:
There is a common type of fraud called “affinity fraud” that is common within certain social groups and which relies upon strong religious or other social bonds to perpetrate frauds or schemes. Some of the most common groups targeted by these types of fraudsters are Evangelical Christian Groups, Anabaptist Groups (Amish and Mennonites) and Jewish Groups. Many times, the perpetrators of these affinity fraud schemes will enter a congregation and target its elderly members. Their lack of sincerity usually only becomes apparent after people have lost money.
Because the elderly are vulnerable and frequently the target of unscrupulous investment professionals, they need to be protected. The elderly investor and his or her family and friends need to be vigilant to protect the investor. If there is a problem or a question, an investment fraud attorney should be consulted quickly.