Get Even More Visitors To Your Blog, Upgrade To A Business Listing >>

Missouri Elder Fraud Law Sets Example For States

Six months after going into effect, Missouri’s new law protecting seniors from financial exploitation hasn’t led to many arrests, but it’s still having a noticeable impact.

“People are telling us that as they’re getting older, they are able to invest with more confidence,” says Missouri Secretary of State Jason Kander. “Financial professionals are telling us that they have more confidence in their clients’ ability to invest, too, because they’re now empowered to hit the pause button if they think someone is being exploited.”

Enacted in August 2015, the Missouri Senior Savings Protection Act (SSPA) allows broker-dealer representatives to report suspicious financial activity and hold wire transfers for up to 10 business days if they feel like a client is being exploited on the basis of their age or mental status.

Previous to the law, broker-dealers could not report their suspicions because of privacy laws and contract terms. The SSPA shields them from liability when reporting suspected fraud.

The new law applies to adults older than 60 or those between 18 and 59 with a verifiable mental or physical impairment. If a brokerage suspects such a person is the victim of fraud or exploitation, it is authorized, but not required, to first report those suspicions to the state Department of Health and Senior Services or the Missouri Commissioner of Securities. Afterwards, the broker-dealer is permitted to report the suspected fraud to a relative, legal guardian, or power-of-attorney.

Missouri’s statute mirrors previous laws in Washington state and Delaware — together, the three laws served as basis for model state legislation drafted by the North American Securities Administrators Association.

Nationally, broker fraud costs senior citizens $2.6 billion, said securities lawyer Don McBride at St. Louis-based Greensfelder, Hemker & Gale.

“In some ways, broker-dealer reps know their clients better than anyone else, including family members,” McBride said. “They can play a tremendous role in preventing exploitation and fraud.”

St. Louis-based Wells Fargo Advisors, long a proponent of stronger protections against senior exploitation and abuse, advocated for the law.

“We think the immunity provisions are important,” said Ron Long, director of Wells Fargo Advisors’ Elder Client Initiative. “Securities law has us faithfully and promptly executing client orders and transactions, and privacy laws prevent us from raising concerns about dementia and other mental status issues. Now we can be an extra set of eyes for government agencies and prevent some of these scams before the money is moved out of the country.”

Broker-dealers must carefully consider their suspicions before reporting, McBride said.

“Not everything that sounds suspicious is fraudulent or exploitative,” McBride said. “The law protects broker-dealers acting in good faith on behalf of their clients, but never defines what ‘good faith’ is.”

Since broker-dealers are not doctors, they must also carefully vet the mental statuses of their clients.

“When it’s a client that you’ve seen over several years, you can tell when there’s a change and a concern about mental capacity,” Long said. “We can only ask that representatives report what doesn’t feel right, what they’re seeing and what they’re hearing. We can’t ask them to diagnose the client.”

At Wells Fargo Advisors, representatives’ suspicions are first reported to the Elder Client Initiative, which then decides whether to bring the matter to state regulators and client family members.

The law doesn’t cover investment advisors, meaning an advisor reporting suspicious activity or delaying the execution of client requests may be held liable for resulting losses or any other damages.

“My view is that it should and probably will be applied to investment advisors and other financial professionals,” Long said. “It bears noticing that the large firms like Wells Fargo were here first, we were the ones who came together with regulators and social service professionals to advocate for this law. This benefits the clients and the industry at the same time.”

State legislators have proposed similar bills in Nebraska and Indiana.

“Our goal was to create something that the rest of the country could emulate, and that’s what we’ve done,” Kander said.

Full Article & Source:
Missouri Elder Fraud Law Sets Example For States

This post first appeared on National Association To Stop Guardian Abuse, please read the originial post: here

Share the post

Missouri Elder Fraud Law Sets Example For States


Subscribe to National Association To Stop Guardian Abuse

Get updates delivered right to your inbox!

Thank you for your subscription