Financial Exploitation of the Elderly: An Overview of Regulatory Action

Abstract

Financial exploitation of the elderly is a significant problem. In 2011, it was estimated that seniors lost on average, $2.9 billion as a result of financial abuse. By the year 2050, it is estimated that 83.7 million people will be aged 65 or older, double what it was in 2012. As a larger portion of the population becomes “elderly,” greater numbers are also suffering from cognitive impairment. Additionally, as people age, there is a decline in financial literacy.

This article examines the work done by securities regulators, the SEC, NASAA, and FINRA, to address the issues connected with financial exploitation of the elderly. The article discusses FINRA guidance to firms with respect to best practices for identifying and addressing financial exploitation of the elderly. It also provides an overview of the recently adopted NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation, as well as FINRA Rules 2165 and 4512, which provide firms with tools to address suspected financial exploitation of seniors faster and more effectively.