The U.S. securities industry is praising a new state law that gives financial advisors legal cover to alert the authorities to the possible financial exploitation of seniors and to prevent their assets from being depleted.
The U.S. Securities Industry and Financial Markets Association (SIFMA) is voicing its support for the new Senior Savings Protection Act signed into law by Missouri Governor Jay Nixon last Friday and is designed to prevent the financial exploitation of senior investors.
SIFMA has long expressed support for the law, which would give brokers a path to contact securities regulators, state authorities and immediate family voluntarily when they suspect that a senior client is being financially exploited. Brokers who voluntarily report suspected exploitation would be immune from civil and administrative liability. Furthermore, brokers would be allowed to refuse to execute disbursements from clients’ accounts for up to 10 business days in situations they regard as suspicious to give the state time to investigate the situation.
Missouri is the third state to enact such a law, following Washington and Delaware, SIFMA notes. The trade group also stresses that advisors are in a unique position to help prevent the exploitation of older investors over the age of 50 as they account for 77% of all personal financial assets in the U.S.; in addition, SIFMA says that more than half of these investors utilize the services of advisors.
“SIFMA applauds Missouri’s leadership in enacting the Senior Savings Protection Act to prevent the financial exploitation of seniors, and we encourage other states to adopt similar models,” said Kim Chamberlain, managing director and associate general counsel with SIFMA. “Aging investors are at a greater risk of diminished capacity, making them vulnerable targets for scams and exploitation. Persons working for broker-dealers are often firsthand witnesses to potential exploitation, and this legislation will give them the ability to help protect senior investors from those who wish to take advantage of them.”
SIFMA reports that U.S. seniors lose an estimated US$2.6 billion annually to financial exploitation; and that research estimates that one in five have been victims of financial fraud of some sort. This includes exploitation by friends and family members; abuses of powers of attorney; Jamaican Lottery scams; Nigerian Prince scams; romance scams; and others. Furthermore, SIFMA says that the National Adult Protective Services Association estimates that only 1 in 44 cases of financial exploitation are ever reported.