When it comes to investing, trust is the foundation of every relationship between a broker and their client. Unfortunately, that trust is not always honored. For seniors and those who rely on caregivers, the risks are even higher. Unsuitable recommendations, misleading advice, or outright fraud can devastate the financial stability of already vulnerable individuals.
At Landsman Saldinger Carroll (LSC), we’ve seen firsthand how financial exploitation of older adults or those dependent on caregivers can ripple through families. Whether it’s a broker steering someone toward risky investments they don’t understand, or a caregiver exerting undue influence, these disputes are deeply personal. Our mission is to protect investors by pursuing justice through FINRA arbitration and related proceedings.
In this post, we’ll explore how FINRA arbitration works, why elder financial abuse is such a common issue, and how vulnerability—especially when caregiving is involved—can amplify the risks. Most importantly, we’ll outline what investors and families can do to fight back.
Key Takeaways
- FINRA arbitration is the primary forum for resolving disputes between investors and brokers.
- Seniors and caregiving-dependent individuals face unique vulnerabilities in financial decision-making.
- Elder financial abuse often occurs through unsuitable recommendations, excessive trading, or fraudulent schemes.
- Caregiving dynamics can heighten risks—whether through undue influence or lack of oversight.
- Victims have legal recourse, and experienced counsel can help recover losses and hold brokers accountable.
Understanding FINRA Arbitration
What Is FINRA?
The Financial Industry Regulatory Authority (FINRA) is the self-regulatory organization overseeing brokerage firms and registered representatives in the United States. Its mission is to safeguard market integrity and protect investors from misconduct.
Because virtually every brokerage account agreement requires disputes to be resolved through arbitration—not in court—FINRA arbitration is where most investor claims are decided.
How FINRA Arbitration Works
FINRA arbitration is designed to be faster and more streamlined than traditional litigation. Here’s a simplified breakdown:
- Filing a Claim – The investor (or their representative) files a statement of claim with FINRA, outlining the broker’s misconduct and the damages sought.
- Response – The brokerage firm and broker submit a written answer.
- Panel Selection – Arbitrators are chosen from a pool of qualified professionals trained by FINRA.
- Discovery – Both sides exchange documents and evidence.
- Hearing – Much like a trial, the case is presented before the arbitrators. Witnesses testify, and evidence is introduced.
- Award – The arbitrators issue a decision, which is binding.
While arbitration may lack some of the procedural protections of court, it is often the only avenue for wronged investors to recover damages.
The Growing Problem of Elder Financial Abuse
Why Seniors Are Targeted
Older investors often hold significant savings, retirement accounts, or property accumulated over a lifetime. For unscrupulous brokers, seniors represent “ideal” targets: individuals with assets who may be less able to detect misconduct.
Factors that increase vulnerability include:
- Cognitive decline or memory issues
- Social isolation
- Dependence on caregivers or family members
- Lack of financial literacy in complex markets
According to the Consumer Financial Protection Bureau (CFPB), elder financial exploitation results in billions of dollars in losses annually. Brokers who exploit seniors may do so through unsuitable investments, churning accounts, or outright misrepresentation.
Common Schemes Against Seniors
- Unsuitable Recommendations – Placing retirees into risky or illiquid products like variable annuities or non-traded REITs.
- Excessive Trading (Churning) – Generating commissions by making unnecessary trades.
- Unauthorized Transactions – Making trades without client consent.
- Ponzi or Affinity Scams – Leveraging trust or community ties to steal funds.
Each of these strategies exploits the trust seniors place in financial professionals.
Caregiving and Investor Vulnerability
How Caregiving Affects Financial Decision-Making
Seniors who rely on caregivers—whether family members or professionals—face additional layers of complexity in financial matters. Caregivers often help with day-to-day management, which can create opportunities for undue influence or neglect.
A caregiver may:
- Discourage independent financial decision-making.
- Pressure the senior into authorizing transactions.
- Fail to detect inappropriate investment strategies.
Even when caregivers act in good faith, their limited financial knowledge may leave seniors exposed to broker misconduct.
The Intersection of Caregiving and Elder Abuse
Investor vulnerability doesn’t always stem from brokers alone. Sometimes, caregivers themselves misuse their position of trust. In cases where caregivers collaborate with brokers—or simply fail to question suspicious activity—the senior’s assets can quickly erode.
That’s why at LSC, we take a holistic approach: examining not only broker conduct but also the circumstances surrounding caregiving relationships.
FINRA Rules Protecting Vulnerable Investors
FINRA recognizes the heightened risks for seniors and vulnerable adults. Key protections include:
- Rule 2111 (Suitability Rule) – Brokers must have a reasonable basis to believe a recommendation is suitable based on the client’s financial situation, age, and investment objectives.
- Rule 4512 (Trusted Contact Person) – Firms must make reasonable efforts to obtain a trusted contact to help safeguard accounts.
- Rule 2165 (Financial Exploitation of Specified Adults) – Allows firms to place temporary holds on disbursements when exploitation is suspected.
These rules are powerful tools, but they rely on enforcement. Arbitration is often the only way to hold brokers accountable for violations.
Case Examples: When Vulnerability Meets Misconduct
While details vary, the themes in these disputes are often similar:
- A retired widow relies on her caregiver for daily support. The caregiver introduces her to a broker who recommends high-risk oil and gas investments. Losses exceed $200,000.
- An elderly man with mild dementia is persuaded to buy variable annuities locking up his assets for a decade, despite needing liquidity for healthcare expenses.
- A family discovers unauthorized withdrawals from their father’s account after his caregiver forged signatures with a broker’s tacit approval.
Each scenario highlights the devastating consequences of financial exploitation. Through FINRA arbitration, families can pursue recovery.
How LSC Approaches FINRA Arbitration Cases
At Landsman Saldinger Carroll, we combine deep litigation experience with a strategic understanding of FINRA’s rules and procedures. Our approach includes:
- Thorough Investigation – Reviewing account records, communications, and compliance documents.
- Expert Collaboration – Working with financial experts to demonstrate unsuitability, churning, or negligence.
- Client-Centered Advocacy – Understanding the emotional toll, particularly when caregiving dynamics are involved.
- Aggressive Representation – Pushing back against large firms that often have significant resources.
We know these cases are about more than money—they’re about accountability, dignity, and protection for vulnerable investors.
What Families Can Do to Protect Themselves
Even before disputes arise, families can take proactive steps:
- Designate a Trusted Contact with the brokerage firm.
- Monitor Accounts Regularly for unusual transactions.
- Ask Questions about any complex or high-risk recommendations.
- Document Everything—keep records of communications and account statements.
- Seek Legal Advice Early if something seems wrong.
For caregivers, understanding the financial landscape is just as important as providing physical and emotional support.
Why Legal Representation Matters
Brokerage firms often have teams of attorneys defending them in arbitration. Without strong representation, investors risk being overwhelmed. Experienced FINRA arbitration attorneys:
- Understand the nuances of FINRA rules.
- Know how to present evidence effectively to arbitrators.
- Have experience handling claims involving elder financial abuse.
- Can negotiate favorable settlements or push cases through hearings when necessary.
At LSC, we’re not just litigators—we’re advocates for fairness in an industry where vulnerability can too easily be exploited.
Conclusion: Protecting the Vulnerable Through FINRA Arbitration
Investors who are seniors or who rely on caregivers can be particularly vulnerable to unsuitable investment recommendations or fraud. At Landsman Saldinger Carroll, we understand the added sensitivities in cases where caregiving plays a role.
If you or a loved one has been the victim of financial exploitation, you don’t have to face it alone. FINRA arbitration provides a pathway to justice—and we have the experience and determination to see it through.
FAQs
What is FINRA arbitration?
FINRA arbitration is a dispute resolution process where investors bring claims against brokers or brokerage firms, decided by neutral arbitrators instead of a judge or jury.
Can seniors get special protections in FINRA disputes?
Yes. FINRA has implemented rules specifically addressing elder financial exploitation, including holds on suspicious disbursements and requirements to designate trusted contacts.
What if a caregiver is involved in the financial abuse?
Arbitration can still address broker misconduct, and separate legal actions may be pursued against caregivers. An attorney can advise on both fronts.
How long does FINRA arbitration take?
Cases typically take 12–18 months, though some may resolve sooner through settlement.
Do I need an attorney for FINRA arbitration?
While not required, legal representation is highly recommended. Brokerage firms have experienced counsel, and navigating arbitration alone is rarely effective.
