WASHINGTON, D.C. (February 11, 2020) – The North American Securities Administrators Association (NASAA) today said reports of suspected senior financial exploitation are increasing in jurisdictions that have enacted legislation or regulations based on NASAA’s Model Act to Protect Vulnerable Adults From Financial Exploitation.
“We are pleased that the NASAA model act is helping states in their fight against senior financial exploitation. The model act is on a course to become operative in a majority of states this year and as more states enact legislation based on this model we expect to see additional reporting leading to more enforcement actions and greater protections for seniors and other vulnerable adults,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities.
Twenty-five jurisdictions throughout the United States have adopted legislation or regulations based on or similar to the NASAA model act since NASAA members voted to adopt the model act in 2016. On January 13, New Jersey became the most recent state to enact a law based on the NASAA model act and several additional states are expected to consider legislation based on the NASAA model this year.
The model act provides industry participants and state regulators new tools to help detect and prevent financial exploitation of vulnerable adults. In particular, the model act offers broker-dealer and investment adviser firms qualified immunity for delaying disbursements when the firm reasonably believed financial exploitation would result. The act also mandates reporting to a state securities regulator and state adult protective services agency when a qualified individual has a reasonable belief that financial exploitation of an eligible adult has been attempted or has occurred.
NASAA’s 2019 Enforcement Report for the first time documents the effectiveness of the model act. In 2018, the latest available data, states that have enacted legislation based on the NASAA model received more than 400 reports from broker-dealers and investment advisers. These 400-plus reports shed light on victims of securities fraud, elder exploitation, and other seniors who need some form of assistance.
States have taken action to prevent or stop senior financial exploitation, to punish those responsible, and have also referred reports to more appropriate agencies and sometimes even sought to refer seniors to non-investigative services. Based on 426 received reports, state securities regulators opened 81 investigations, and initiated 32 formal enforcement actions. Reporting firms also delayed the disbursements of funds 57 times
Many of the first states to enact the Model Act have seen a drastic increase in use of these statutes and the number of reports of potential financial exploitation from firms. For example, in 2018, the number of reports received in Alabama, which enacted the NASAA model in 2016, increased 225% over fiscal year 2017. Alabama’s reports are on track to exceed fiscal 2018’s numbers.
NASAA and its members, the state and provincial securities regulators of the United States, Canada and Mexico, have long been leaders in the fight against senior financial exploitation. The NASAA model act is one of several initiatives NASAA and its members have undertaken to protect seniors and other vulnerable investors.
To learn more about the NASAA senior investor initiatives, including a legislative update for 2020, visit the Senior Issues page under Industry Resources on NASAA’s website or NASAA’s Serve Our Seniors website at serveourseniors.org.