By Alisa Radut, Fall 2017 IAC Student Intern
The North American Securities Administrators Association (NASAA) warns seniors about the risk from financial fraud. As the frontline security regulators, members of NASAA want to send a clear message that more needs to be done to put a stop to financial fraud against senior citizens. To raise awareness and urgency needed to prevent senior financial exploitation, NASAA conducted a survey among state securities regulators, “who are the investment industry’s local cops on the beat,” from all 50 states. The survey indicated that despite an increased awareness of senior financial fraud among, more steps need to be taken in addressing the problem. According to the survey, over 50% of financial agencies indicated they implement investor education and senior outreach as part of the action against senior fraud. As part of the effort to raise awareness, approximately the same percentage of agencies have adopted a version of the NASAA Model Act to protect vulnerable adults from financial exploitation. Since the enactment of the legislation, a significant number of agencies have received reports of suspected senior fraud. Furthermore, according to the survey, over 75% of the firms questioned have been able to prevent fraud by stopping distribution of funds, pursuant to these laws. The survey highlights the need for prevention and detection resources, as most cases of fraud are not discovered until it is too late.
Because fraud is not decreasing, broker-dealers and advisers should do more to help counteract the increased instances of senior fraud. Another survey NASAA recently released revealed that most senior abuse cases involved customers between the ages of 81 and 90. In fact, NASAA confirmed that the age group most vulnerable to financial fraud is 70 and older. The good news is that information is available to assist in addressing the problem. For example, as part of the Model Act, NASAA provides advice on what steps the industry, caregivers, investors, and policy makers can take to help prevent senior investor fraud. Similarly, as indicated by the survey, about 90% of financial firms have some sort of internal process for addressing fraud issues among senior citizens.