FINRA has issued a complaint against Stanley Clayton Niekras accusing the broker of elder financial abuse. According to the regulator, Niekras allegedly cheated a couple, who are in their nineties and in failing mental and physical health, out of over $70K in financial panning services fees.
Even though Niekras didn’t have an investment advisory or financial planning agreement with the elderly couple, he allegedly billed them for hundreds of hours of time that he purportedly spent working on their “financial future” –work that he claimed to have done over four years. The purported elder fraud would have taken place while he worked for MML Investors Services. FINRA said that Niekras charged the couple $250/hr in retroactive compensation. The couple received their bill for these supposed services in 2013.
FINRA contends that Niekras knew that he had no right to the “financial planning fees or the “estate planning” fees he was charging the couple. The self-regulatory organization said that the broker, who had been contending with tax liens, had told MML Investors Services that he could cover the liens because of commissions he was expecting. Niekras purportedly thought that he could sell variable annuities to the children of the older couple, who had gifted them with about $500K in securities and cash each.
The VA sales never happened. According to FINRA, Niekras admitted that he billed the older couple for services to replace the commissions he’d expected from these sales.
It was just last month that FINRA submitted proposed rules to the SEC related to the financial exploitation of vulnerable adults, including seniors. The SRO is proposing amendments that would mandate that firms make reasonable attempts to get the name and contact information of a trusted third party as another contact person for a customer’s account. It also submitted a new proposal for a rule that would let firms put a temporary hold on disbursing securities or funds when there are reasonable grounds to suspect financial exploitation. The firms would have to notify the chosen, third party contact person about the hold. The SEC has to approve these rules before they can go into effect.
At the moment, FINRA does not explicitly allow firms to notify non-account holders about someone else’ account or place a temporary hold on such disbursements even when financial exploitation of a vulnerable adult or a senior customer is suspected.
The proposed rules are compatible with the guide recently put out by the North American Securities Administrators Association—a companion to NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation—that helps brokerage firms and investment advisory firms set up practices and procedures to allow them to better protect vulnerable adult clients, including senior customers. Also, over the summer, the U.S. House of Representatives voted to approve the Senior Safe Act, which protects firms and their financial advisers from being in violation of privacy laws should they need to report suspicions of possible elder financial abuse. Meantime, laws recently went into effect in Vermont, Alabama, and Indiana ordering financial advisers to tell state authorities when they believe that a vulnerable adult or older person might be the victim of elder fraud and abuse.
Our elder financial fraud lawyers represent older investors and their families in trying to recoup their investment losses. We also work with other vulnerable adults and their families. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
FINRA: Broker cheated elderly couple out of $70K for Bogus Financial Planning Services, InvestmentNews, November 8, 2016