FINRA Releases Report on its Securities Helpline for Seniors

Highlights Lessons for Investors, Effective Senior Protection Practices for Firms, and Instances of the Helpline Flagging and Preventing Fraud

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today released a

on the FINRA Securities Helpline for Seniors 1-844-57-HELPS (1-844-574-3577), which has fielded more than 2,500 calls and helped investors recover nearly $750,000 in voluntary reimbursements from firms since its launch in April. The report highlights important lessons for investors gleaned from calls and lays out effective practices for firms to consider when working with senior investors.

The report notes that seniors, who can be especially vulnerable, are frequent targets for fraud. This is a growing concern as the number of people 85 years and older is projected to increase more than 50 percent between 2012 and 2030. Moreover, cognitive impairment affects more than 20 percent of adults over the age of 70; and in 2014, retirement assets of those aged 65-74 were estimated at $3.5 trillion, making that population an inviting target for scammers.  

Susan Axelrod, FINRA Executive Vice President, Regulatory Operations, said, “FINRA created the Helpline to provide assistance to senior investors for concerns they have with their brokerage accounts and investments, and I am incredibly pleased with the positive impact it has had in just a few short months. The Helpline has also served as a tremendous source of information as we actively engage with seniors, learn of and respond to issues they are experiencing, and use this real-time intelligence to inform our regulatory programs and provide effective practices to firms.”

Calls to the Helpline allowed FINRA to identify several emerging scams, including fraud centering on taxes, bogus lottery winnings and binary options, all of which were flagged by FINRA and resulted in investor alerts. Additionally, helpful tips on using BrokerCheck (FINRA’s online tool) before investing and guidance on how to navigate the transfer of an account after the death of a family member were frequent points of discussion with investors seeking help.  

The report highlights several cases where investors calling the Helpline were assisted either before becoming the victim of fraud or in recovering funds after they were scammed. These cases include:

• The son of a potential victim called the Helpline because he was concerned about a person soliciting an investment from his elderly father. Helpline staff assisted the caller in performing a BrokerCheck search of the person and found that FINRA had barred him from association with any FINRA member firm. With this information, the son stopped his father from making a bogus $110,000 investment.
• An elderly investor’s accountant called the Helpline after finding a suspicious document among his 86-year-old client’s tax receipts. FINRA launched an investigation and discovered the client’s broker had borrowed $220,000 in 2012 and was repaying her $1,200 every month. FINRA notified the broker’s firm and within 10 days the firm terminated him. Separately, FINRA barred the broker from association with any FINRA member firm for his failure to cooperate with its investigation of his activities. The firm, previously unaware of the loan, made the client whole on the remaining balance owed and included a nominal interest amount.
• An anonymous tipster called the Helpline with allegations that a broker was using his influence to be named executor and primary beneficiary of an elderly client’s $3 million estate. Based on the tip, FINRA immediately launched an investigation and found the broker had not only violated his firm’s internal procedures by failing to disclose his role as executor of his client’s estate, but also falsified firm records to conceal his activities. FINRA took formal disciplinary action against the broker. Separately, the rightful heirs of the estate recovered a majority of estate assets through a civil court action.

Importantly, the report outlines several effective practices firms should consider implementing to protect seniors. Many of these practices focus on strong policies and supervisory procedures that, for example, prevent brokers from borrowing from clients. The report singles out the strong policies and programs of one firm that is especially effective in protecting vulnerable investors, including:

• adopting mandatory annual training for all employees to help them recognize elder abuse and steps to take when abuse is suspected;
• establishing a specialized, centralized unit that coordinates the firm’s responses and client defense strategies for complex senior issues and serves in an advisory capacity across the firm for registered representatives who have concerns and questions about senior issues;
• publishing and distributing client-focused educational materials to help investors protect themselves from possible scams;
• hosting symposiums across the country with experts addressing issues that impact older Americans; and
• joining industry groups focused on combating elder abuse, which has increased the firms’ protections through information sharing among industry peers.     

The report states that firms should consider their size, retail client profile, product offerings, complaints or concerns raised by senior clients, the training of its workforce, and other factors in determining how to design and implement programs and controls to best serve this segment of the investing public.

Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2014, members of the public used this service to conduct 18.9 million reviews of broker or firm records. Investors can access BrokerCheck at www.brokercheck.finra.org or by calling (800) 289-9999. Investors may find copies of disciplinary actions as well as other disciplinary documents in FINRA’s Disciplinary Actions Online database. Investors can also call FINRA's Securities Helpline for Seniors at (844) 57-HELPS for assistance or to raise concerns about issues they have with their brokerage accounts and investments.

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.