“A rising number of states are giving firms the legal right to withhold transactions even if a trusted advisor or an interested party approves the transaction because we can argue that the senior is being coerced,” Beuerlein said.
The amount of time permitted to freeze an account temporarily varies from state to state.
“In Missouri, we can hold the account 10 days to conduct our own investigation if we report the case to the state agency that oversees and prosecutes elder abuse claims,” said Beuerlein.
According to Missouri state law where Edward Jones is headquartered, the investment firm can extend a temporary hold under certain circumstances.
“The firm is required to contact everyone that's authorized on that account, including the trusted contact, as well as conduct an internal investigation to determine whether there's reason to continue holding up a disbursement and if so, the firm must reach out to a court to get the hold extended further,” said Ellis.
Although the new Finra rules may absolve financial advisors of some liability, what concerns watchdog groups like Americans Against Abusive Probate Guardianship (AAAPG) is the serious risk of elder abuse and exploitation once a case is turned over to court officials or even state agencies that investigate elder abuse claims such as Adult Protective Services. "We have investigated and documented countless cases from around the country that are posted to our website,” said Dr. Sam Sugar, founder of AAAPG in Florida. “We get new desperate phone calls every day about local and state court officials using their unlimited power to create fraudulent guardianships through illegitimate orders signed by complicit judges to put the elderly and their assets under the control of a court-appointed guardian," Dr. Sugar said.
Once a senior is deemed incapacitated and becomes a ward of any state, he or she loses all rights under the U.S. Constitution and can be placed in a locked memory care facility.
“That’s often how elders are robbed, over medicated, isolated from family and friends and ultimately starved to death and there is no legal recourse under federal or state law to stop it," Dr. Sugar told Financial Advisor magazine.
According to Ellis, Edward Jones’ financial advisors will not be making any decisions to contact authorities alone once a client’s account has been flagged as potentially suspicious.
“Any time there is a situation where the advisor thinks they might need to reach out to a trusted contact, he or she is charged with discussing it with a supervisor and a supervisor will then authorize whether they can reach out to the trusted contact or not and if petitioning the court is needed to further restrict an account, our compliance and legal department will step in and carry that out in lieu of the financial advisor,” Ellis said.