Justice For Older Investors
The 2010 Elder Justice Act (EJA) is part of the Health Protection and Affordable Care Act. Everyone knows that there has been a lot of public discussion and legal controversy over parts of the health care law. However, none of it has involved EJA, a successor to the Older Americans Act. The purpose of EJA is to assist in protecting those Americans age 60 and more from financial and physical abuse and exploitation. The problem with EJA is that it does not grant the elderly a right to make a claim in a court or an arbitration for the recovery of financial losses. Only the government can prosecute or start a law suit for a violation of EJA.
Investment Cheating and Losses Are Up
Looking at experience in just one state shows the size of the problem unaffected by EJA. Between 2001 and 2008, according to the Virginia Commonwealth Department of Criminal Services, financial crimes in Virginia increased 8.6 percent, but for those 65 and older the increase was 18 percent. In 2010, in Virginia the average loss for senior victims was $88,000. Since the Department of Justice is unlikely to get involved with many $88,000 cases, the potential loss to an average senior is huge.
Unsuitable Investments A Problem for Elders
The shortcomings of the current law, pertaining to financial exploitation of the elderly, were addressed in 2013 by the Government Accountability Office in a statement entitled “Federal Government Has Taken Some Steps but Could Do More to Combat Elder Financial Exploitation”. The GAO focused on three areas of continuing need. One of them was exploitation by financial service professionals. In the case of financial services exploitation, GAO specified the “sale of fraudulent investments (Ponzi or pyramid schemes)” and the “Sale of financial products or services unsuitable for the older adult’s circumstances, such as long term annuities.”
Yet, despite a glaring problem for elders, there is still no national private right of suit addressed to the older, modest investor against a greedy financial advisor capitalizing on a trusting elder.