Morgan Stanley Ordered To Pay Elderly Investor $843K. FINRA Arbitration Panel Says Broker-Dealer Neglected To Protect Senior Scam Victim
A Financial Industry Regulatory Authority (FINRA) arbitration panel recently ordered Morgan Stanley to pay an elderly Florida widow $843,000 in compensatory damages after she fell victim to financial scammers. According to the ruling, the broker-dealer was negligent and should be held liable.
The claimant accused Morgan Stanley of breach of fiduciary duty, breach of contract, and breach of care owed to a senior investor when it allegedly did not protect her from fraudsters. This 75-year-old sustained nearly $1.75M in losses from what her broker negligence lawsuit contends was a “clear breach” of securities industry standards meant to protect older investors.
Fraudsters persuaded her that her identity had been stolen, she was the victim of a child pornography scam, and the government was about to freeze all of her assets for years. The scammers got this woman to believe that she needed to change her money to gold bars and cash and cryptocurrency, with the latter to be sent to a new Social Security number.
According to the investor’s elder financial exploitation lawsuit, even with the “glaring red flags and obvious warning signs of financial exploitation,” her Morgan Stanley broker authorized and facilitated the abrupt withdrawal of more than $2M over 9 days in 2023.
Elder Financial Exploitation and Broker Protections
Unfortunately, senior financial abuse remains a huge problem and is committed by loved ones, acquaintances, strangers, or even corrupt financial advisors. FINRA even has Senior Exploitation Rules in place designed to protect older investors while helping broker-dealers deal with risks involving possible financial abuse of this demographic. This includes FINRA Rule 4512 , which requires that firms take reasonable action to obtain the contact information of a person the account holder trusts in the event of financial exploitation or diminished capacity. There is FINRA Rule 2165, which allows a broker-dealer to put a temporary hold on funds or securities disbursement from specified adult customers’ accounts if financial abuse is suspected.
Brokerage firms are supposed to properly supervise each customer’s account and train their registered representatives in how to identify signs of possible elder financial exploitation. When the firm neglects to fulfill this duty—and senior financial abuse occurs under their watch, even if by a third party—the broker-dealer could be held liable for the client’s losses.
Skilled Elder Financial Exploitation Lawyers
Many of our clients are older investors who have been the victim of senior financial abuse because their financial advisor either engaged in some type of broker misconduct or was negligent in some way. We also represent seniors whose brokerage firms failed to protect them from becoming the victims of elder fraud by a third party or some type of mass investment scam.
Unfortunately, older investors become the victims of unscrupulous individuals and even financial professionals every year because of their savings and, in some cases, cognitive impairments. When this happens, the consequences for the victims can be life-altering.
We take the threat of senior financial exploitation so seriously that we have even partnered with elder law and estate planning firm McCulloch & Miller to help elderly investors and their families take preemptive measures.
As skilled Elder Financial Exploitation Lawyers, Shepherd Smith Edwards and Kantas provide quality securities representation and personalized attention. If we decide to work together, we will fight for you and your family’s right to financial recovery from the negligent broker-dealer or investment adviser.
Contact Our Elder Financial Exploitation Lawyers:
Call our Elder Financial Exploitation Lawyers at (800) 259-9010 or fill out this form.