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FINRA Increasing Scrutiny of Complex Products Marketed to Seniors

The Financial Industry Regulatory Authority is stepping up its investigation into how financial advisory firms market complex financial products directed at seniors and the elderly.

According to FINRA Executive Vice President Susan Axelrod, complex products sold to seniors is "something that has all of our attention" in the wake of an increasing number of cases of alleged misconduct in which seniors were duped, led into fraudulent schemes or otherwise separated from their money.

Often times, brokers and advisors were charged with making unsuitable recommendations—for instance suggesting a high risk equity holding to an elderly investor whose investment objective specified a preference for low risk tolerance.

In other cases, firms and executives have been barred, ordered to pay restitution or even the result of criminal investigations into fraudulent activity.

For instance, in June 2012, Brookstone Securities, its CEO and a broker were barred and ordered to pay fines and restitution for various roles in a fraudulent scheme. At the time of the misconduct, Brookstone denied wrongdoing and instead blamed investors for their own losses.

According to FINRA CEO Richard Ketchum, seniors are especially vulnerable to yield-chasing and high-risk products as the appeal of short-term gains competes with the wisdom and patience of long-term strategies and goals.

Investors of all ages and seniors particularly should ensure that products being recommended by brokers and advisors fit the investor's particular investment objective—if there exists a clear preference for low tolerance vehicles, brokers and their employing firms are obligated to ensure that recommendations and new purchases fit that criteria and that risk remains within the investor's target range.

If, in reviewing your investment portfolio, you discover that your broker has recommended and caused the acquisition of high-risk securities that run in direct conflict with your objectives which has proven harmful to your investments, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

News: Can regulators stave off 'massive increase in seniors misery?' (InvestmentNews)

Categories: Elder Abuse, Suitability, FINRA
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The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
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Phone: (800) 699-1881 | Local Phone: (818) 760-9880.
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