Enforcement News: Financial Elder Abuse, Vulnerability, and the SEC’s Enforcement Response

By: Jeffrey M. Haber

Financial abuse of seniors and other vulnerable adults is among the most damaging and the least visible forms of investor harm. It arises when age, illness, cognitive decline, or dependence on trusted professionals erodes an individual’s ability to evaluate advice or resist coercion, even while legal capacity nominally remains intact. In the securities context, this vulnerability intersects directly with federal and state regulation, in which advisory relationships are built on trust, discretion, and an informational imbalance. When those features are exploited, the resulting harm implicates not only private loss but the integrity of the regulatory system itself.

The SEC’s enforcement action against the Estate of John R. Brodacki, III and Castle Hill Financial Group, LLC, illustrates how financial exploitation and abuse can run afoul of professional and/or regulatory compliance. According to the SEC, from at least June 2018 through September 2025, defendants fraudulently induced their clients – many of whom were elderly, retired, or seriously ill – to transfer money to Castle Hill. The SEC alleged that Brodacki told the clients that their funds would be used to invest for their benefit and/or that of their relatives. The clients understood that defendants would manage these investments as their investment advisers, and they never told them otherwise, said the SEC.  As examples, defendants told some clients that they would invest in high-yield bank accounts, stocks, bonds, certificates of deposit, notes, or securities of private companies.

The SEC alleged that instead of making such investments, defendants used clients’ funds largely to pay Brodacki’s own personal and business expenses, including lavish meals, membership fees to exclusive social clubs, tuition, and travel; to make payments to other advisory clients; and to make payments to Brodacki’s family members. According to the SEC, defendants returned only $162,750 to 18 investors, and most of those repayments were made from other advisory clients’ funds entrusted to defendants to invest on their own behalf, which, the SEC said, was behavior typical of a Ponzi scheme.

The SEC further alleged that defendants continued to solicit and accept client funds for purported investment advisory services even after the registered investment adviser with which they were associated terminated the relationship in July 2025.

The SEC charged each defendant with breaching their fiduciary duties to at least 18 of their advisory clients and misappropriating approximately $1.68 million in client funds in violation of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks disgorgement with prejudgment interest from each defendant, a civil money penalty and a permanent injunction against Castle Hill.

Takeaway

The alleged misconduct is instructive not simply because of the magnitude of the losses —approximately $1.68 million — but because it demonstrates how exploitation may occur in the absence of overt incapacity, coercion, or recognizable fraud. According to the SEC, clients relied on longstanding personal relationships with the adviser and received documentation purporting to reflect legitimate, appreciating investments. Others sought conservative income‑generation or estate‑planning solutions and were instead directed into off‑platform transactions that circumvented custodial protections and supervisory controls. As alleged, the misconduct operated through consent that was valid and procedurally documented, yet substantively undermined by trust, dependency, and informational asymmetry.

The SEC’s enforcement action reflects a regulatory view that exploitation of senior and vulnerable investors is not a peripheral concern, but an important component of adviser fraud. By grounding its claims in breaches of fiduciary duty under Sections 206(1) and 206(2) of the Investment Advisers Act, the SEC treated the misuse of trust, authority, and client dependency as integral to the violation itself. Apparent authorization, personal familiarity, or documentation does not insulate conduct from regulatory scrutiny when those features are used to disguise breaches of fiduciary duty, fraud, and misappropriation.

More broadly, the action highlights the risk of financial abuse in regulated environments. Written custodial requirements, supervisory policies, and disclosure alone are insufficient, where advisers induce clients to operate outside established safeguards — particularly where age, illness, or isolation heightens susceptibility. The enforcement action underscores the SEC’s mission that protecting vulnerable investors is inseparable from maintaining market confidence, and that enforcement must address the subtle ways in which alleged financial exploitation and abuse adapts to compliant‑looking structures.

The litigation release announcing the enforcement action can be found here.

The complaint, filed in Securities and Exchange Commission v. Personal Representative of the Estate of John R. Brodacki, III and Castle Hill Financial Group, LLC, No. 3:26-cv-30055 (D. Mass. filed Apr. 2, 2026), can be found here.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm.