Senior Exploitation & Holds

Background

As the American population ages and the world becomes more technologically complex, financial exploitation has become more common. Senior citizens and people with certain disabilities are often the most affected. The Financial Industry Regulatory Authority (FINRA) recently shared this:

Each day for the next 12 years, an average of 10,000 Americans will turn 65. Con artists tend to target older people, in part, because they are more likely to have built up nest eggs, according to the FBI. And more recent estimates suggest that $28.3 billion (AARP, 2023) to over $36 billion is stolen or defrauded from millions of elderly Americans every year, depending on methodology.

🔑 In January 2016, the North American Securities Administrators Association (NASAA) adopted a model rule designed to protect vulnerable adults from financial exploitation. Under the rule, a vulnerable adult is:

• A person age 65 or older, or
• A person age 18 or older that cannot protect their own interests

📌 To understand how financial professionals protect these clients, this chapter covers:

• Financial exploitation
• Governmental disclosures
• Third-party disclosures
• Disbursement delays
• Client records

🔑 Numbers & deadlines

Financial exploitation

To protect clients effectively, a professional first needs to understand what counts as exploitation. NASAA’s model rule defines financial exploitation as:

The wrongful or unauthorized taking, withholding, appropriation, or use of money, assets or property of an eligible adult; or

Any act or omission taken by a person, including through the use of a power of attorney, guardianship, or conservatorship of an eligible adult, to:

… Obtain control, through deception, intimidation or undue influence, over the eligible adult’s money, assets or property to deprive the eligible adult of the ownership, use, benefit or possession of his or her money, assets or property; or

… Convert money, assets or property of the eligible adult to deprive such eligible adult of the ownership, use, benefit or possession of his or her money, assets or property.

📌 In plain terms, financial exploitation is the theft or misuse of a vulnerable adult’s money or assets. It can happen in many different situations. Real-world examples cited:

• Lawyer steals over $1 million from 21 disabled clients
• Caretaker steals $750,000 from 91-year-old dementia patient
• Scammer steals $260,000 from 68-year-old autistic man
• Facility manager steals $50,000 from residents with severe disabilities

Governmental disclosures

When a financial professional reasonably believes a vulnerable adult is being financially exploited, the firm must notify the appropriate authorities. This responsibility falls on qualified individuals, meaning any agent or investment adviser representative (IAR) serving in a supervisory, compliance, or legal capacity for a broker-dealer or investment adviser.

These are the registered individuals at securities firms who handle sensitive situations — often managers, directors, partners, or officers. In many cases, a qualified individual begins investigating after a colleague reports a concern. For example, an IAR might tell their manager they believe a client is being taken advantage of by a family member.

Adult Protective Services (APS) responsibilities

Each state runs its own APS program, but the functions are generally similar. Typical responsibilities include:

• Investigating potential abuse, neglect, or exploitation
• Offering protective services to those affected
• Facilitating the support of trusted family and friends
• Involving law enforcement if necessary

🔑 Safe harbor / immunity

Once notified, the authorities take whatever actions are appropriate. When disclosures are made in good faith, financial professionals receive immunity from punitive actions and civil liability. In other words, qualified individuals generally don’t face administrative or legal consequences for reporting suspected exploitation in good faith.

Third-party disclosures

🔑 NASAA’s model rule also allows (does not require) qualified individuals to contact third parties that the vulnerable adult has specifically designated. When opening a brokerage account, firms typically ask investors to name a trusted contact person, defined as:

A “trusted contact person” is a person that you authorize your brokerage firm to contact if your broker has a reasonable belief that your account may be exposed to possible financial exploitation or fraud.

• Clients are encouraged to choose a close family member or friend who is at least 18 years old.
• ⚠️ Naming a trusted contact person usually isn’t required to open an account, but it’s strongly recommended (unless it’s an institutional account).
• As with disclosures to authorities, qualified individuals receive immunity from punitive actions and legal liability when third-party disclosures are made in good faith.

🔑 Who may be notified

Disbursement delays

Beyond making disclosures, qualified individuals may delay disbursements (withdrawals) when financial exploitation is reasonably believed to be occurring. This matters because exploitation often involves pressuring a vulnerable adult to withdraw funds so someone else can take them. For example, two individuals stole nearly $100,000 from an elderly person with dementia by gaining withdrawal access to their financial accounts. If a firm identifies a situation like this while it’s happening, it may be able to stop the disbursement.

🔑 When exploitation is reasonably believed to be occurring, NASAA’s model rule sets specific procedures for disbursement delays:

🔑 Delay expiration

The model rule also sets limits on how long the delay can last. The delay expires upon the sooner of:

*The authorities are the same organizations required to be notified (as discussed above) — APS and the state administrator.

Client records

Securities firms must provide client records to APS or law enforcement to support investigations into suspected exploitation. This same requirement applies to investigations that don’t involve vulnerable adults.

When legal authorities present warrants or other legal mandates, firms must provide access to non-public client records. These authorities include:

• Local law enforcement
• The Internal Revenue Service (IRS)
• The Federal Bureau of Investigation (FBI)

Free lunches

NASAA has the following to say about free lunches:

A common setting for fraudsters to engage with their victims is by offering a free lunch or dinner seminar for older investors interested in learning more about investing in retirement. Often, attendees of these free seminars are pitched unsuitable or fraudulent investment products and pressured into providing personal information. Remember: there’s no such thing as a free lunch.

A free meal in exchange for attending an investment seminar can be tempting. However, these events have a long history of high-pressure sales tactics, including pushing attendees to invest before leaving. Senior citizens and other vulnerable adults are often targeted.

Misleading senior designations

Some financial professionals have created misleading or false designations to appear uniquely qualified to work with certain clients. In particular, senior-related designations have been a recurring issue. NASAA explains it this way:

Seniors should carefully check the credentials of individuals holding themselves out as “senior specialists.” Some of these individuals hold nothing more than a “designation” as “senior specialists” implying that they have expertise in assisting seniors when in fact they have received no significant education or training in senior financial matters.

Key points

Vulnerable adults

• A person age 65 or older, or
• A person age 18 or older that cannot protect their own interests

Qualified individuals

• Agent or IAR in a supervisory, compliance, or legal capacity

Protocols when potential exploitation identified

• Must promptly notify these authorities
  • Adult Protective Services (APS)
  • The state administrator
• May notify trusted contact persons (third parties)

Disbursement delay protocols

• Must notify these parties within 2 business days
  • Adult Protective Services (APS)
  • The state administrator
  • Any person authorized on the account
• Firm continues investigating the potential exploitation
  • Must share results with authorities within 7 business days

Disbursement delay timeframes

• Delay expires upon the sooner of:
  • The firm confirming financial exploitation will not occur
  • 15 business days after the delay was imposed unless extended by authorities
  • If extended, 25 business days after the delay was imposed
• Delay may continue indefinitely with court order

Sources

Primary/official references for the material in this chapter. Every link was fetched and returned HTTP 200 on 2026-08-15.