Six months after going into effect, Missouri’s new law protecting seniors from financial exploitation hasn’t led to many arrests, but it’s still having a noticeable impact.
“People are telling us that as they’re getting older, they are able to invest with more confidence,” says Missouri Secretary of State Jason Kander. “Financial professionals are telling us that they have more confidence in their clients’ ability to invest, too, because they’re now empowered to hit the pause button if they think someone is being exploited.”
Enacted in August 2015, the Missouri Senior Savings Protection Act (SSPA) allows broker-dealer representatives to report suspicious financial activity and hold wire transfers for up to 10 business days if they feel like a client is being exploited on the basis of their age or mental status.
Previous to the law, broker-dealers could not report their suspicions because of privacy laws and contract terms. The SSPA shields them from liability when reporting suspected fraud.
The new law applies to adults older than 60 or those between 18 and 59 with a verifiable mental or physical impairment. If a brokerage suspects such a person is the victim of fraud or exploitation, it is authorized, but not required, to first report those suspicions to the state Department of Health and Senior Services or the Missouri Commissioner of Securities. Afterwards, the broker-dealer is permitted to report the suspected fraud to a relative, legal guardian, or power-of-attorney.
Missouri’s statute mirrors previous laws in Washington state and Delaware — together, the three laws served as basis for model state legislation drafted by the North American Securities Administrators Association.
Nationally, broker fraud costs senior citizens $2.6 billion, said securities lawyer Don McBride at St. Louis-based Greensfelder, Hemker & Gale.
“In some ways, broker-dealer reps know their clients better than anyone else, including family members,” McBride said. “They can play a tremendous role in preventing exploitation and fraud.”
St. Louis-based Wells Fargo Advisors, long a proponent of stronger protections against senior exploitation and abuse, advocated for the law.
“We think the immunity provisions are important,” said Ron Long, director of Wells Fargo Advisors’ Elder Client Initiative. “Securities law has us faithfully and promptly executing client orders and transactions, and privacy laws prevent us from raising concerns about dementia and other mental status issues. Now we can be an extra set of eyes for government agencies and prevent some of these scams before the money is moved out of the country.”