Elderly Financial Exploitation

Soreide Law Group has filed a FINRA arbitration on behalf of our client (Claimant) against:

WELLS FARGO CLEARING SERVICES, LLC (Respondent).

The Claimant is a 90-year-old retiree, with dementia living in Ohio. He has no children and lives alone.   Unfortunately, the Claimant fell victim to a fraud that is commonly used to prey on the elderly population. He was tricked into believing he had won a sweepstakes prize of several million dollars and had to “prepay” his taxes to claim the prize. Beginning in July of 2019, these scammers took advantage of his declining mental acuity and tricked him into withdrawing his money from his life savings at WELLS FARGO CLEARING SERVICES to pay the scammers. The lawsuit alleges that from July of 2019 through October 2021, the Claimant withdrew almost all of his life savings, approximately $428,000, to give to the scammers all under the watchful eye of the Respondent. 

The lawsuit claims that WELLS FARGO CLEARING SERVICES allegedly failed the Claimant and were negligent and breached their fiduciary duties owed to their customer by:

a. Never setting up a trusted contact person on his account in accordance with FINRA rules to check on any suspicious or large withdrawals.

b. Failing to ask the most basic questions raised by his out of character withdrawals.

c. Failing to place a temporary hold on the Claimant’s uncharacteristic and patently suspicious withdrawals pursuant to FINRA Rule 2165.

d. Failing to make a single phone call to any family member that the broker knew how to track down which further highlights the importance of having a “trusted contact person,” on file for the Claimant pursuant to FINRA Rule 4512.

e. Ignoring a multi-decade long track record of frugality by the Claimant and completely ignoring multiple five-figure withdrawals at a rapidly increasing velocity.

f. Failing to notice the cognitive decline of the Claimant which should have triggered intervention and further investigation on the nature and purposes of the large cash withdrawals.

FINRA specifically created what it calls “Senior Exploitation Rules” to provide broker/dealers with the tools to protect elderly clients from financial exploitation.

FINRA Rule 4512 (Customer Account Information) requires firms to make reasonable efforts to obtain the name and contact information for a “trusted contact person” upon the opening of a customer’s account or when updating account information. The “trusted contact person” is intended to be a resource for the firm in administering the account, protecting assets and responding to possible financial exploitation or diminished capacity. The lawsuit alleges that WELLS FARGO CLEARING SERVICES never set up a “trusted contact person” for the Respondent.

FINRA has repeatedly advised broker/dealers about the importance of naming a trusted contact person for the protection of elderly clients. FINRA has cited the following benefits of naming a trusted contact:

• Requesting that customers name trusted contacts can be an opportunity for firms and associated persons to engage in beneficial conversations with customers about scams and financial exploitation
• A member firm can contact a trusted contact to inquire about the customer’s health status (e.g., a customer is known to be ill or infirm, and the firm has been unable to contact the customer).
• A member firm can contact a trusted contact to address potential financial exploitation of the customer before placing a temporary hold on a disbursement or securities transaction.
• A member firm can reach out to a trusted contact if it suspects that the customer may be suffering from Alzheimer’s disease, dementia or other forms of diminished capacity.

The lawsuit alleges that in the case of the Claimant, the red flags were obvious. In 2020 alone he made five withdrawals, in January $40,000, February $50,000, July $61,000, August $16,000, November $36,000, and December 2021 $51,000. The lawsuit claims that it should have been enough to alert anyone at WELLS FARGO CLEARING SERVICES, and then another $98,000 was withdrawn in 2021. This Claimant is a retired veteran who has all his healthcare costs covered by the VA and lives on social security. Allegedly, not one of these withdrawals had a hold placed on it or was even challenged as the account was plummeting toward zero.

The lawsuit is alleging WELLS FARGO CLEARING SERVICES actions have caused the Claimant damages of approximately $428,000.00. The lawsuit alleges negligence, breach of fiduciary duty and negligent supervision.

Soreide Law Group hopes to bring attention to the importance of naming a “trusted contact person” for any investor who may need an additional layer of supervision. To discuss this article or any other securities issues contact Soreide Law Group and speak to an experienced securities lawyer at no cost:  888-760-6552.

Soreide Law Group represents our clients nationwide before FINRA on a contingency fee basis, no fee to you if no recovery.