Investment News and lawyersandsettlements.com reported recently that there is a growing trend of financial elder abuse being reported in stockbroker fraud arbitrations. This may well be the result of a combination of the bad economy and plain ole greed. The elderly are preyed upon all too often. For example, the Financial Industry Regulatory Authority (FINRA) recently granted awards to two senior citizens defrauded by brokers.
One award went to a 95-year-old California investor, David Wolfson, who accused StockCross Financial Services, Inc., and two of its brokers of misconduct and self-dealing. According to Wolfson, who filed a Statement of Claim with FINRA in March, 2009, the brokers recommended unsuitable and risky investments, thereby putting Wolfson’s home at risk. Then, after bilking Wolfson of all his assets, including his cash reserves, insurance money, and home equity, the brokers discharged Wolfson as a client.
At arbitration, Wolfson won a total of $1.6 million, including $320,000 in compensatory damages, $960,000 in damages for elder abuse, $234,000 in legal fees and an additional $83,000 in other fees. StockCross was also ordered to pay $10,000 for not following discovery orders.
Also in 2009, FINRA announced that it was permanently barring a former New York broker after finding that the broker defrauded an elderly investor out of a significant portion of his life savings. The 90-year-old man died before his daughter brought the broker’s activities to FINRA’s attention. FINRA found that the broker induced the customer to invest approximately $500,000 between 2004 and 2006 in a speculative, development-stage company that did not have publicly-available financial information. Furthermore, FINRA found that the broker sold those securities without the knowledge of the two brokerage firms with which he was registered.
The elderly client reportedly paid between $3 and $4 per share for stock in the company, although FINRA found no reasonable grounds for valuing the stock at those prices. The broker netted approximately $76,000 in commissions for sale of the dubious investment. FINRA concluded that the broker “was found to have effected unsuitable investments for the customer given the customer’s age and financial condition.”
Sadly, preying on the elderly is not a new trend. In keeping with our firm’s commitment to “help those who need it most,” we welcome the opportunity to investigate instances of financial elder abuse. Our firm is equipped to handle cases involving allegations combining financial elder abuse and stockbroker fraud, which typically involve time consuming and expensive arbitrations. You can contact Archie Grubb, a lawyer in our firm, at 800-898-2034 or by email at Archie.Grubb@beasleyallen.com. If you know of a senior citizen who is a victim of financial elder abuse at the hands of an unscrupulous broker or investment advisor, feel free to contact Archie.
Sources: Investment News and lawyersandsettlements.com
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