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What is Elder Financial Abuse?

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author

In this article, we will explore what to do if you suspect that someone you know has become a victim of elder financial abuse.  This article also discusses various ways to report this type of abuse.

According to the Financial Industry Regulatory Authority (FINRA), an “elder” is anyone aged 65 and older. If an elderly relative seems unusually preoccupied with money or has expressed concern over finances, loved ones should provide them with resources to fight back against fraud and misconduct. Financial abuse is unfortunately one of the most common types of elder abuse.

What is Considered Elder Financial Abuse?

Elder financial abuse occurs when someone close to an elderly person takes advantage of the relationship to misappropriate funds. An elder may suffer financial abuse at the hands of a grandchild or a financial advisor. The fraudster may be in a position to manipulate the elderly person for emotional reasons, or simply because they are aware of the elderly person’s mental decline.

Financial Professionals and Elder Financial Abuse

Unfortunately, we have seen many cases of financial advisors who take advantage of their clients. For instance, in one case of alleged elder financial abuse, a broker allegedly ingratiated himself with a customer by volunteering to run errands for her. He persuaded her to add him as a joint signatory on her account, ostensibly so he could make withdrawals and payments for her. In fact, the SEC alleged he was withdrawing his client’s money for his own personal use, eventually misappropriating approximately $300,000.

Be wary if a financial advisor wants to open a joint account with an elderly client or become their beneficiary.

What to Do if You Suspect Elder Financial Abuse

Are you worried about elder abuse of a friend or a relative? There are several authorities you can contact. Act quickly – it is better to find out sooner rather than later. Financial abuse can be ruinous to elderly people and their estates.

How to Report Elder Abuse

Get in touch with the local Adult Protective Services Office in your state. You may also want to contact your Attorney General. The local District Attorney investigates cases of financial fraud, including misuse of bank accounts, illegal property transfers, appropriation of pensions, and cases of abuse that involve Power of Attorney.

How to Report Abuse by a FINRA Broker

If you suspect you may be the victim of elder financial abuse at the hands of a broker or financial advisor, you should contact FINRA’s Helpline for Seniors: (844) 574-3577. FINRA representatives can review your accounts with you. Representatives can also pass along your tip – many FINRA investigations begin with a call to the Helpline. FINRA investigations may lead to fines, suspensions, and even permanent bars for a broker who engaged in abuse.

Pursuing a criminal or civil case for financial elder abuse could take considerable time. If you are the victim of elder financial abuse perpetrated by a FINRA-registered broker, FINRA arbitration can be a quicker way to recover lost funds. Moreover, most firms require investors to recover money through FINRA arbitration.

How Does FINRA Combat Elder Abuse?

FINRA regulates stock brokers and brokerage firms. As a regulatory body, FINRA creates rules and regulations specifically designed to address financial exploitation.

FINRA defines financial exploitation as: “Any act of omission by a person, including through the use of Power of Attorney, guardianship, or any other authority, to obtain control, through deception, intimidation, or undue influence, over the Specified Adult’s money, assets or property.”

The following rules often feature in cases of elder financial abuse:

FINRA Rule 2165

Stock brokers can help their clients if they believe they may be the victim of financial elder abuse, perhaps at the hands of a relative. FINRA Rule 2165 allows brokers to put a temporary hold on an account to prevent any disbursements while the firm reviews the broker’s concerns. If they determine that financial elder abuse has taken place, the firm will notify the state regulator, or another agency that has jurisdiction.

FINRA Rule 3241

According to FINRA Rule 3241, registered persons, such as brokers, are not allowed to be named as a beneficiary of a client’s estate except under a few circumstances.

Brokers may be named as beneficiaries if:

  1. The client is a member of the broker’s immediate family, or,
  2. The broker provides written notice to their firm and received written approval prior to being named a beneficiary of an investor’s estate or receiving a bequest from an investor’s estate.

Rule 3241 also prohibits brokers being named as executors or trustees of an estate, unless:

  1. The client is a member of the broker’s immediate family, or
  2. The broker provides written notice describing the position and the person’s proposed role to the firm and receives firm approval before acting in such capacity, and
  3. The registered person does not derive financial gain from acting in such capacity other than from reasonable fees.

Claim Your Free Case Evaluation

Kurta Law has extensive experience handling elder financial abuse cases. Contact our securities lawyers for a free case evaluation – they can help you decide if you have a case and outline exactly what steps to take to move forward. FINRA arbitration is a distinct process from a civil lawsuit and our lawyers make the process as smooth and straightforward as possible. Contact (877) 600-0098 or

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.