September, 2021
Washington — On October 1, 2021, a new law will go into effect in Maryland, protecting susceptible adults from exploitation by financial advisors and others who would take advantage of them.
Here is a summary of the new law as passed by the Maryland legislature and signed by the governor:
"Authorizing the Division of Consumer Protection in the Office of the Attorney General to bring certain actions on behalf of certain susceptible adults and older adults; authorizing the Securities Commissioner of the Division of Securities of the Office of the Attorney General to bring a civil action on behalf of certain susceptible adults and older adults; ... authorizing a susceptible or older adult to bring an action under certain circumstances; etc."
Readers of this blog will recall the genesis of this law, the case of Vess v. Price, in which a financial advisor, Robert Price, arranged to have himself become the sole beneficiary of the estate of his client, elderly widower Howard Vess. After Vess died, Price produced a new will claiming he, Price, was the estate's beneficiary, superseding the will his client had filed at his county courthouse, which left his entire estate to charities. Claudia Vess, niece of Howard, sued the financial advisor in a case that lasted six years, with the support of her uncle's rural neighbors, ultimately prevailing in a settlement that saw her uncle's charities receive benefits from the estate, as she knew he had intended. Unfortunately, the financial advisor spent much of the Howard Vess estate in his own defense, leaving diminished amounts for the charities.
Maryland law must be changed to guard against financial advisors becoming clients' beneficiaries. Lawyers would be disbarred if they attempted the same chicanery. Financial advisors are often positioned even better than lawyers to take advantage of their elderly clients.
After the long legal battle, Claudia Vess asked her Maryland state legislative delegation for just such a law. Delegate Al Carr led the way by endorsing the effort; Delegate Emily Shetty and Senator Jeff Waldstreicher, members of key committees, introduced new legislation at her request. Public hearings were held in February, 2020. Because of the Covid pandemic, the Maryland legislature adjourned early without taking action, but legislation was again introduced in 2021 and passed.
The new law includes these findings:
"Studies have shown that millions of vulnerable Americans over the age of 67 may be targets annually, and the financial loss to victims of financial abuse is estimated to be several billion dollars each year... These estimated financial losses increase exponentially when additional related costs to the victim, such as health care, social services, investigations, legal fees, and lost income, are taken into account.. Redress for victims of financial exploitation in Maryland is limited to adult protective services, criminal law enforcement, and costly civil remedies..."The heightened burden of proving guilt beyond a reasonable doubt in a criminal case, the difficulty of proving exploitation when the victim may be older or infirm, and the limited remedies available to adult protective services and law enforcement further support the need for a solution under civil law to address the financial exploitation of susceptible adults and older adults...."
So as of October 1, Marylanders can ask the Attorney General to bring civil actions on behalf of susceptible adults, and can bring actions themselves under the new law entitled "THE MARYLAND STATUTE AGAINST FINANCIAL EXPLOITATION (SAFE) ACT."
The settlement of Vess v. Price achieved a measure of justice, but its long-lasting effect, because it led to a change in the law itself, will be fewer victims of unscrupulous financial advisors and others who prey on the vulnerabilities of the elderly population.
