Document Type

Conference Proceeding

Publication Title

PIABA 21st Annual Meeting Materials

Publication Date




As of 2010, 13% of the population is over age 65; 16% is over age 62. Another 27% of the population falls into the “Baby Boomer” category, aged between 45 and 64.

As Americans approach retirement, the question is raised, “are they prepared?” A study published earlier this year found, “a substantial fraction of persons die with virtually no financial assets—46.1 percent with less than $10,000—and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support. In addition, this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s.” Yet with such low asset levels, they would have little capacity to pay for unanticipated expenses for health, entertainment, travel, or other activities, let alone other financial shocks.

It is important that the regulations and statutes protect the growing group of retirees. In a survey conducted in 2010, 20% of the respondents age 65 and over say they have been taken advantage of or were the victim of fraud. Of four questions asked about investments, a majority or plurality of respondents age 65 and over gave the incorrect answer to two of the questions: 57% think it is true that “A very high rate of return is only ok as long as the investment is guaranteed or bonded.” The survey points out that this is neither true nor false. 46% think it is true that “If an investment is registered with the SEC or state securities regulators, it has been reviewed to make sure it’s safe.” Only 39% believed it was a false statement.

Victims of fraud may be both men and women. A study conducted by MetLife in 2009 found: “Women who have not been in a position to make financial decisions may be more trusting in the advice of others, particularly if they are new at seeking financial advice. Women with cognitive problems may be easily influenced by others, especially if that influence increases in intensity and becomes a ‘hard sell.’” “Men may tend to be more risk-taking in making financial investments than women, so they may be prone to being vulnerable to ‘professionals’ or family members who seek to invest their money by promising unrealistically high returns.”

This paper will review recent FINRA and SEC actions involving older customers. It will then summarize a number of criminal actions taken at the state level against investment professionals. Lastly, it will review the state statutes that cover fraud specifically against elderly investors.


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Reprinted with the permission of Public Investors Arbitration Bar Association (PIABA).



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