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Financial Elder Abuse In California Securities Arbitrations

July 27, 2016

California’s Welfare & Institutions Code provides a series of remedies for financial abuse of those age 65 or older. For years, financial elder abuse has been plead in investor arbitration claims against brokers and investment advisors. Nevertheless, arbitration decisions rarely cite California’s financial elder abuse statutes as a basis for an award. A recent arbitration award against Morgan Stanley suggests that may be changing.

On June 1, 2016, a panel of three arbitrators appointed by the Financial Industry Regulatory Authority (FINRA) in Los Angeles hit Morgan Stanley with an $8.6 million arbitration award. Click here for a link to the decision. The award included $2 million in punitive damages and $491,700 in legal fees and costs. The arbitrators’ decision to award punitive damages cited California’s Welfare and Institutions Code sections 15657.5(b) and 15610.30. The arbitrators also based their decision to award attorney’s fees on Welfare & Institutions Code sections 15657.5(a) and 15610.30.

There are two reasons we believe awards based on California’s financial elder abuse statutes will increase over the coming years. First, the U.S. population is aging as the baby boom generation reaches its retirement years. The Welfare & Institutions Code defines an “elder” as anyone 65 years of age or older.

Second, more retirement assets are in individual retirement and investment accounts than ever before. In the past, many retirees relied on company pensions in which all investment decisions were made by the pension plan’s investment advisors/company. Now, however, with the popularity and growth of 401(k) retirement plans and individual retirement accounts, more elders are responsible for managing their own investments.

None of the individuals are actual clients, witnesses, attorneys, or parties to actual legal proceedings. Any resemblance to actual persons, living or dead, or actual events is purely coincidental. The individuals who appear on the accompanying photos are dramatizations of fictional clients, witnesses, attorneys, or other parties.


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