Sales of Securities and Elder Abuse

Written by Adam Peck Category: Elder Law January 26th, 2013 3 min read

Mention the phrase “elder abuse” and most lawmakers conjure up images of the fleecing of Brook Aster’s estate or an elderly relative kept in squalid conditions. Cases like these usually make for excellent tabloid fodder. In fact, recently the New York Post prominently featured a story about Cher Thompson, a young woman who allegedly bilked a near deaf 90-year-old man with dementia of his life savings.
But what gets lost is perhaps the most prevalent form of elder abuse-financial elder abuse by stockbrokers. FINRA, Wall Street’s governing and enforcement body, defines financial elder abuse as the “misuse of an older adult’s money or belongings by a relative or person in a position of trust.”

A clear cut example recently made headlines in a number of financial trade publications. Two stockbrokers named Thomas B. Cooper and Peter L. Boorn at Beverly Hills-based StockCross Financial Services Inc. allegedly bilked a 95-year-old investor named David Wolfson of nearly all his assets and put his house at risk after recommending unsuitable and risky investments. The brokers dropped Mr. Wolfson as a client once they drained him of his cash. An arbitration panel awarded Mr. Wolfson triple damages in the amount of $1.6 million, an unprecedented amount, underscoring the severity of the abuse.

Exploiting the elderly is actually quite common on Wall Street. There isn’t a lot of money to be made managing the accounts of risk-averse investors who are looking to clip coupons and live off the interest income from their investments. Some Wall Street firms just can’t help themselves and see the elderly as ripe for the picking.

Another recent example was the case of Sergio M. Del Toro. Mr. Del Toro is now banned from the securities industry for defrauding a 90-year-old Minnesota man who lived in a nursing home of $511,000. Mr. Del Toro recommended that the elderly man put his entire net worth into the company stock of a firm called 3rd Dimension, for which there was no market or publicly quotable pricing. Mr. Del Toro’s alleged motiviation was a classic one: he received a 15 percent commission, or about $76,650.

Elder abuse can also take the form of sales of securities that on the surface seem reasonable but in fact are inappropriate. Although FINRA specifically warned brokerages in 2007 against taking advantage of elderly investors, it didn’t stop Wall Street in 2008 from targeting the elderly with investments that preyed on their need for liquidity. The most common of these investments were the preferred shares of major financial institutions that offered attractive dividends.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.