Financial advisers could put transactions on hold if they suspect exploiting of vulnerable adult

LINCOLN — It’s too easy for a caregiver of an elderly relative to stumble across a financial record, get online and say, “I’d like to withdraw $10,000 out of this account,” a legislative committee was told Tuesday.

That was part of the rationale given by State Sen. Brett Lindstrom of Omaha, who works as a financial adviser, for adopting a law that allows such investment advisers and brokers to put a “hold” on transactions they suspect might involve the exploiting of a vulnerable adult.

Legislative Bill 297, the Nebraska Protection of Vulnerable Adults from Financial Exploitation Act, would expand protections passed into law last year that allow bankers to pause a transaction they reasonably suspect is taking advantage of a vulnerable adult or senior citizen.

The issue is a major problem, according to officials with the AARP and Nebraska division of Adult Protective Services, which investigates allegations of elder abuse.

An estimated one in five Americans over age 65 is a victim of financial exploitation, with the average loss in such cases estimated at $125,000, said Jina Raglin of the AARP Nebraska. In the past two years, between 23% and 25% of reports of elder abuse have involved financial exploitation, said Andrea Lowe of the Nebraska Department of Health and Human Services.

The committee advanced the bill for debate by the full Legislature after its hearings were over on Tuesday.

Lindstrom told members of the Legislature’s Banking, Commerce and Insurance Committee that family members are most often involved in such exploitation. Under LB 297, a financial adviser or broker could put a hold of up to 30 days on a transaction to determine whether an elderly client really wanted to make it. Information could also be shared with Adult Protective Services and law enforcement, if necessary.

At least 28 other states have adopted similar bills or statutes, and a very similar proposal is being introduced in Iowa this year, according to State Banking Director Kelly Lammers.

Last year, state lawmakers heard stories of bankers concerned about large withdrawals by seniors who were convinced that they had won the Publishers Clearinghouse sweepstakes or a lottery in Jamaica, said Gothenburg Sen. Matt Williams, chairman of the banking committee.

LB 297 would be the next step in thwarting such fraud, he and other advocates for the bill said, by granting the same authority to financial advisers and brokers/dealers.

No one testified against the bill on Tuesday.

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Financial advisers could put transactions on hold if they suspect exploiting of vulnerable adult

House approves legislation to help advisers combat senior exploitation

The Senior Safe Act provides liability protection for financial professionals who report cases of suspected elder abuse to regulators or other authorities

Legislation that would help financial advisers combat financial exploitation of senior citizens gained House approval Monday night in a bill that could provide a vehicle to get it through the Senate.

House lawmakers passed on voice vote a larger bill that contained the Senior Safe Act, a measure that provides liability protection for investment advisers, brokers and other financial professionals who report cases of suspected elder abuse to regulators or other authorities.

The Senior Safe Act was also included in a larger bill approved by the Senate Banking Committee in December that would reform parts of the Dodd-Frank financial law.

But the bill the House passed on Monday may provide the smoothest pathway to full Senate approval for the elder-abuse legislation because the Senate Banking bill could get hung up in the House.

"This [House bill] that it is attached to seems the least controversial piece of legislation that contains Senior Safe Act provisions," said Paul Richman, vice president of government affairs at the Insured Retirement Institute. "That's why we're hopeful that this House bill will be taken up expeditiously in the Senate."

The Senior Safe Act, written by Sens. Susan Collins, R-Me., and Claire McCaskill, D-Mo., was approved by the House in a previous Congress but failed to make it through the Senate when one senator placed a hold on the bill. It had to be reintroduced in the current congressional session.

Another obstacle facing the bill is a difficult Senate agenda that includes approving a budget and tackling immigration legislation.

"This is still high on their list in the Senate, but until other issues are resolved, it will be difficult to move it forward," Mr. Richman said.

If the bill is approved by Congress, it would bring a federal law into the senior financial exploitation area.

A Financial Industry Regulatory Authority Inc. regulation goes into effect on Feb. 5 that gives brokers safe harbor to report exploitation and allows them to place temporary holds on disbursements from accounts of elderly clients who may have been victimized by scams.

Also, a number of states have approved a North American Securities Administrators model rule that is similar to the Finra regulation but that mandates incident reporting.

The Senior Safe Act has wide support among financial industry trade associations and other organizations, including IRI, NASAA, the American Council of Life Insurers and the Investment Company Institute.

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House approves legislation to help advisers combat senior exploitation