Articles Tagged with Financial exploitation of the elderly

Chicago-based Stoltmann Law Offices has represented scores of senior investors who’ve suffered losses from dealing with brokers who’ve sold them inappropriate investments. It’s a story we’ve seen all too often: A senior investor is “befriended” by a broker, who then sells them investments that are extremely risky and lose money. Before they know it, their nest egg is scrambled.

Regulators and consumer watchdogs have been trying to protect seniors for decades from rapacious brokers, advisors and insurance agents. The industry police are outnumbered by hundreds of thousands of salespeople selling anything from junk variable annuities to exchange-traded products that generate high commissions for the brokers while fleecing investors’ investment accounts.

Under a relatively new rule from FINRA, the securities industry regulator, older investors may garner somewhat more protection from unscrupulous advisors and brokers. It will provide a safeguard against broker-advisors from gaining entrees into their financial affairs through various vehicles. “FINRA Rule 3241 limits the ability of a broker-dealer to be named as a beneficiary, executor, trustee, or power of attorney for one of their customers,” according to The National Law Review. “Broker-dealers must provide written notice to their firm, and the firm must assess the situation and determine whether to approve or disapprove of the fiduciary relationship.”

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with brokers who have sold highly unsuitable investments to their clients. Brokers have a legal obligation to sell investments that are suitable for their clients’ age, risk tolerance, financial sophistication, and mental capacity. Sometimes, though, they ignore all of these safeguards to take advantage of older customers to generate what they think are easy commissions.

The worst cases that we’ve represented usually involve wealthy elderly clients whose portfolios are pilfered and re-invested in risky vehicles that lose large amounts of money, often leaving them impoverished. These practices are commonly known in the industry as “selling away,” or diverting assets away from investments brokerages normally deem inappropriate for older clients.

Eduardo Tarajano, Sr., 80, is suing his broker Jorge Sonville for investing more than $4 million in a Key Biscayne, Florida, liquor store, which was later sold for $585,000. Sonville, working for Merrill Lynch, had allegedly drained Tarajano’s family trust to buy a stake in the store. Tarajano’s federal suit alleges that Sonville worked with Tarajano’s son and the broker’s cousin to “pilfer the accounts Merrill Lynch was managing.” The cousin reportedly received a commission for the liquor store transaction.

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