SEC to Fight Financial Elder Abuse and Fraud by Upping Broker and Advisor Oversight in Retirement Accounts

Attorney Advising Disclaimer

The SEC is increasing scrutiny in its reviews of retirement account and investments targeted to seniors, releasing a "National Exam Program Risk Alert" vowing to focus on brokers and financial advisers whose higher-risk investment and sales practices may harm clients' retirement accounts and investment portfolios.

According to the statistics, over 5 million elderly clients are victims of financial abuse annually, making the SEC's decision to provide greater regulatory attention to brokers and advisers involved with retirement accounts a no-brainer.

Specifically, the SEC will focus on five areas where brokers and financial advisers may fail their clients:

  • Brokers and advisers must maintain compliance with federal securities laws by providing reasonable basis for recommendations. In its statement, the SEC says it will review how suitably advisors provide these recommendations.
  • Conflicts of interest remain an item of concern for the SEC, whose investigators will review whether brokers effectively disclose such conflicts and take other steps to achieve compliance with industry rules and regulations.
  • Supervision and compliance controls get the firms involved by ensuring brokerages bear some responsibility for their representatives' compliance (or lack thereof) with policies and procedures. The SEC will review whether appropriate measures, such as written supervisory procedures (WSPs) are in place to achieve such compliance.
  • The SEC will review the appropriateness of firms' marketing and disclosure practices, which includes a duty to ensure materials distributed to investors are not misleading, omit certain material facts or are otherwise deceptive.

The SEC has long been concerned with scams targeting seniors and affinity fraud with elderly investors, listing the item as a core risk in its National Exam Program (NEP) priorities list in 2014, while in 2012, FINRA released an investment alert warning investors of "Free Lunch" seminars so often targeted toward senior investors.

If you have invested with a broker, financial adviser, or with a firm whose misconduct relating to retirement accounts or similar violations relating to unsuitable recommendations, undisclosed or inappropriate conflicts of interest, supervisory or compliance failures, or misleading statements and omissions of material facts have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

Release: SEC NEP Risk Alert: Retirement-Targeted Industry Reviews and Examination Initiative (VI-6)

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