SEC and NASAA Focus on Senior Investors

By Patricia Uceda, Fall 2014 Graduate Research Assistant

seniorsSEC Commissioner Luis A. Aguilar recently made a public statement regarding the need to focus on protecting senior investors who are being increasingly targeted by investment fraudsters. One in five Americans aged 65 or older have already been victimized by financial fraud. Even more alarming, 84% of experts specializing in investment fraud and financial exploitation of senior citizens agree that the problem of fraud targeting the elderly is only getting worse.

The reason for this increased fraud is twofold. First of all, senior citizens are very attractive targets for financial exploitation because they usually possess more wealth than any other age group. They have had many years to accumulate wealth over their lifetime through hard work and saving. Additionally, with advanced age sometimes comes diminished capacity, a fact investment fraudsters are well aware of and use to their advantage.

The SEC has ramped up efforts to focus on enforcement actions in cases involving elderly victims, announcing that the detection of elder financial exploitation will be a focus of its 2014 examination program, and providing education to seniors about how to avoid fraud. According to Aguilar, to better protect senior investors the SEC should establish a permanent elder financial abuse working group, host an annual conference focused on issues and solutions relating to elder financial abuse, keep issues impacting elderly investors in mind when promulgating new rules, and increase outreach to elderly investors.

NASAA also recently announced a new initiative focusing on senior investor issues. In response to a recent study which showed that 35% of enforcement actions taken by state securities regulators since 2009 have involved senior citizens, they formed a new Committee on Senior Issues and Diminished Capacity. This Committee will examine concerns raised by senior advocacy groups and broker-dealer and investment adviser firms. NASAA will then recommend appropriate regulatory and industry responses as well as supervisory procedures in order to ensure proper compliance and prevent the financial exploitation of seniors.

You can read more about these initiatives here and here.