Meyer Wilson

Recovering Losses Caused By Investment Misconduct

FINRA Warns B-Ds to Be Careful About Claiming Senior Designations

Earlier this month, FINRA released a Regulatory Notice to remind broker-dealer firms of "their supervisory obligations regarding the use of certifications and designations that imply expertise, certification, training or specialty in advising senior investors (senior designations)."

Currently, there are around 44 different senior designations used by registered representatives in the United States. Over the past few years, as an ever-increasing number of confusing and misleading professional credentials have entered the market, regulators increasingly have become concerned over the potential for misuse and deception, particularly when it comes to senior investors.

The Massachusetts Securities Division, for example, filed a regulatory enforcement action against Brokers Choice of American (BCA) and Senior Benefit Centers Network (SBCN) in which the Division alleged that the BCA and the SBCN "fraudulently touted their financial planning skills, investment expertise and knowledge" and "used such specious titles as ‘Certified Elder Planning Specialists’ to mislead the elderly and disguise the fact that the associates were simply insurance salesmen."

To determine whether firms were adequately supervising the use of such "specious titles," FINRA conducted a 2011 senior designation survey. Based on the survey’s results, FINRA determined that approximately two-thirds of broker-dealer firms permitted registered representatives to use some sort of "senior designation." Unfortunately, the survey also revealed that many of those designations lack rigorous qualification standards and/or adequate supervision.

"As a result," wrote FINRA, "a designation did not ensure that those registered persons holding the designation possessed financial services skills that were unique or valuable to senior investors."

This could open the door to elder financial abuse and investment fraud, because most investors cannot tell the difference between a legitimate professional designation and "a designation that is simply a marketing tool."

To help ensure investors are protected from dubious designations, FINRA recommended firms prohibit the use of designations that do not require:

  • A rigorous curriculum;
  • An emphasis on ethics;
  • Continuing education;
  • Demonstrable experience, and
  • A public disciplinary process.

Whether or not firms will follow FINRA’s recommendations remains to be seen.

Categories: General

Choose a Firm with Accolades:

  • Super Lawyers
  • Million Dollar Advocates Forum
  • Preeminent AV Peer Review Rated
  • Best Lawyers Lawyer of the Year
  • Best Lawyers Best Law Firm
  • The Best Lawyers in America
  • Avvo 10/10 Rating