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SEC building in D.C. U.S. Securities and Exchange Commission building in Washington, D.C. (Photo: Mike Scarcella/ALM)

The financial exploitation of seniors is an unfortunate trend in the securities industry that has been exacerbated by the COVID-19 pandemic. Fortunately, securities regulators and Congress have recognized the severity of this trend and taken steps to not only protect the senior citizen population, but also to provide tools to broker-dealers to protect them from liability and guide their conduct when investigating potential financial exploitation of seniors

Over the last two decades, fraudulent activity targeting aging investors has increased significantly in the United States. According to the National Center on Elder Abuse, only self-neglect and neglect by others pose greater threats to older Americans. With baby boomers turning into senior citizens, the protection of this population segment was already an annual focus for securities regulators such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). The COVID-19 pandemic intensified the issue. Due to coronavirus-related illness and other health challenges, the death of a spouse or loved one, social isolation, and diminished mental capacity, senior citizens have become even more vulnerable to financial scams. In response, FINRA, the SEC, and Congress have worked diligently to create and strengthen rules and legislation in an effort to protect senior investors.

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