FINRA Focusing on Protecting Elderly Investors

FINRA Focusing on Protecting Elderly Investors

While brokers and investment advisers are targeting older clients to build their book of business, regulators are attempting to protect graying investors.

Misrepresentation of company strength

Recently, the Financial Industry Regulatory Authority Inc. (FINRA) filed a cease-and-desist order against Avenir Financial Group for sales of equity in the firm. FINRA claims Avenir lied about the health of the firm and raised more than $730,000 over three years in sales mostly to elderly investors.

Avenir registered representative, Cesar Rodriguez, was also barred for personal use of $77,000 in investor funds.

Toll-free FINRA Securities Helpline

The filing against Avenir comes just over a week after FINRA set up a toll-free Securities Helpline where elderly investors can receive assistance from FINRA staff regarding concerns about their portfolio or adviser.

In that period, the help line received about 100 calls from people aged 40 to 99. Susan Axelrod, FINRA executive vice president for regulatory operations, points out that the help line is a way of finding problems before they grow to the level that they trigger a FINRA case.

Seniors in unduly risky investments

Recently, the Securities and Exchange Commission (SEC) and FINRA released a report about how brokers work with and sell to their elderly clients. The SEC and FINRA staff expressed the concern that broker-dealers may be recommending unsuitable securities to senior investors or failing to adequately disclose the related risks.

FINRA’s Susan Axelrod says firms should provide enhanced training for their registered representatives who work with elderly clients, so that they can better handle situations involving clients with diminished mental capacity.

Shorter potential recovery time

Axelrod also claims that brokers should be aware of the dangers of seniors chasing yield through alternative investments, because seniors don’t have as much time as younger clients to recoup from loses.

She also says FINRA is recommending that firms develop strict protocols for due diligence and oversight of accounts for senior citizens.

Boomers reaching retirement

With about 10,000 baby boomers turning 65 every day, protecting seniors has become a top priority for FINRA.

The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.

Source: Investment News