Su­per-rich are also vul­ner­a­ble to fi­nan­cial abuse

The Pak Banker - - OPINION - Michelle Sin­gle­tary

JUST be­fore the re­lease of a sur­vey about el­der fi­nan­cial abuse, an ar­bi­tra­tion panel awarded $34 mil­lion in dam­ages, in­clud­ing hear­ing costs, to the es­tate of Roy M. Speer, a co-founder of the Home Shop­ping Net­work. The award is fur­ther proof that rich peo­ple are just as vul­ner­a­ble to fi­nan­cial ex­ploita­tion as any­one else. In fact, their im­mense wealth can make them even more sus­cep­ti­ble. The case in­volved the in­vest­ment firm Mor­gan Stan­ley Smith Bar­ney and two stock­bro­kers. Speer died in 2012. His wife, Lyn­nda, brought a claim against the com­pany, ar­gu­ing that her hus­band's es­tate and his foun­da­tion funds had been mis­man­aged.

The ar­bi­tra­tion panel agreed, and found that Mor­gan Stan­ley and the bro­kers were guilty of "unau­tho­rized trad­ing, churn­ing, breach of fidu­ciary duty/con­struc­tive fraud, neg­li­gence, neg­li­gent su­per­vi­sion .?.?. and un­just en­rich­ment."In a state­ment is­sued by her at­tor­neys, Lyn­nda Speer said the fi­nan­cial ser­vices com­pany and the stock­bro­kers "breached their fidu­ciary du­ties to Roy and his foun­da­tion and ex­ploited him dur­ing a time of his con­tin­u­ing men­tal and phys­i­cal de­cline."

Mor­gan Stan­ley has de­nied any wrong­do­ing and as­serted through a spokesper­son that it "is dis­ap­pointed by the re­sult and does not be­lieve the award is jus­ti­fied. [It] is in­con­sis­tent with sub­stan­tial ev­i­dence show­ing that the ac­counts were prof­itable for the client and man­aged in ac­cor­dance with his wishes."But let's look be­yond this case to what other se­niors are ex­pe­ri­enc­ing. A new sur­vey of more than 3,500 Amer­i­cans con­ducted for the non- profit In­vestor Pro­tec­tion Trust (IPT) found some trou­bling signs of el­der fi­nan­cial abuse and ex­ploita­tion.

Seven­teen per­cent of Amer­i­cans 65 or older have "been taken ad­van­tage of fi­nan­cially in terms of an in­ap­pro­pri­ate in­vest­ment, un­rea­son­ably high fees for fi­nan­cial ser­vices, or out­right fraud," the sur­vey con­cluded.

Al­though that num­ber is down from the 20 per­cent re­ported in the group's 2010 re­port, it's still dis­turb­ing. When the chil­dren of se­niors were asked whether their par­ents had been swin­dled, 20 per­cent said they had, com­pared with 15 per­cent six years ago.

So what's the point of this re­port and oth­ers like it that show se­niors are per­sis­tently be­com­ing vul­ner­a­ble to fi­nan­cial fraud?

They're a call to ac­tion. We've all got to be­come sen­tinels, says Irv­ing Faught, se­cu­ri­ties ad­min­is­tra­tor for the Ok­la­homa Se­cu­ri­ties Com­mis­sion. "Be watch­ful of your par­ents, and then peo­ple need to be watch­ing you," he said in an in­ter­view. Con­sid­er­ing that a lot of fi­nan­cial fraud is com­mit­ted by rel­a­tives or some­one close to a se­nior, doc­tors should be ob­serv­ing the peo­ple ac­com­pa­ny­ing se­niors to ap­point­ments, said Robert Roush, di­rec­tor of the Texas Con­sor­tium Geri­atric Education Cen­ter at the Bay­lor Col­lege of Medicine.

"Ask se­niors if any­body has asked them to change their will or sign a durable power of at­tor­ney," Faught said.

Roush said cer­tain med­i­cal per­son­nel are re­quired to re­port signs of abuse, in­clud­ing in­di­ca­tions of fi­nan­cial fraud. Still, some might be re­luc­tant to make a call, con­cerned that they are wrong about a sit­u­a­tion.

Al­most half of the adult chil­dren of par­ents 65 or older said they were "very" or "some­what" wor­ried that their par­ents "have al­ready be­come or will be­come less able to han­dle their per­sonal fi­nances over time," the IPT's re­port said.

To help stem the losses re­sult­ing from el­der fi­nan­cial abuse, med­i­cal per­son­nel, le­gal pro­fes­sion­als, phar­ma­cists, ac­coun­tants, so­cial work­ers, bank em­ploy­ees and just about any­one who reg­u­larly comes in con­tact with a se­nior have to be­come in­ves­ti­ga­tors.

The IPT re­port found that 43 per­cent of se­niors had ex­hib­ited one or more of the fol­low­ing warn­ing signs:

?They've got­ten phone calls or mail from peo­ple ask­ing for money or telling them they've won a lot­tery or other con­test. Or they may talk about some new in­vest­ment scheme.?They start talk­ing about how ner­vous they are about mak­ing a fi­nan­cial de­ci­sion.?They may seem con­fused about fi­nan­cial de­ci­sions be­ing made for them by some­one else.?They men­tion loans for gifts that they can't af­ford.?They say that money is dis­ap­pear­ing from their bank ac­counts.

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