Enforcement News: SEC Alleges Financial Elder Abuse Involving Retirement Savings and Risky ETFs

By: Jeffrey M. Haber

Financial elder abuse does not always involve the outright theft of an older person’s money. It can also arise when trusted financial professionals place elderly clients’ savings and retirement funds into investments that are inconsistent with their objectives and risk tolerance, or fail to fully disclose the risks those investments pose. Those concerns are particularly significant when the investments involve complex financial products that may be difficult for ordinary investors to understand and can expose them to substantial losses.

A recent SEC enforcement action highlights those issues. In Securities and Exchange Commission v. Urich, 6:26-cv-05267-JDA (D.S.C. Oct. 29, 2026), the SEC alleged that an investment adviser used his discretionary authority over the accounts of 54 clients, most of whom were elderly, to invest large portions of their savings and retirement funds in leveraged and inverse exchange-traded funds (“ETFs”). These products are designed to achieve leveraged or inverse results over short periods, generally a single day, and their prospectuses warned of heightened risks when held for longer periods. Yet according to the SEC, defendant held the investments for an average of 798 days, even though his clients were not seeking speculative investments and most reported “moderate” or “moderately aggressive” risk tolerances.

The SEC further alleged that defendant knew of the risks associated with these products but failed to fully disclose those risks and the consequences of holding the investments for extended periods. The alleged results were substantial: the 54 affected clients lost, on average, approximately 70% of the money invested in the leveraged and inverse ETFs.

On October 30, 2026, the SEC announced the pendency of the action and that, without admitting the allegations, defendant consented to the entry of a final judgment, subject to court approval, that would permanently enjoin him from violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”); enjoin him from acting as or associating with an investment adviser for two years; and imposing a civil money penalty of $100,000.

The SEC’s Allegations

According to the SEC’s complaint, defendant was an investment adviser representative with United Planners’ Financial Services of America A LP who had authority to make investment decisions for his clients’ accounts. From April 2020 through November 2023, the SEC alleged that defendant used that authority to invest substantial portions of the savings and retirement funds of 54 clients, most of whom were elderly, in five leveraged and inverse ETFs: SDS, DXD, TWM, QID, and UVXY.

Leveraged and inverse ETFs differ from traditional ETFs. They generally seek to produce a multiple, or the opposite, of an index’s performance over a short period, typically a single day. That structure can make them particularly risky when held over longer periods, as their performance can differ significantly from that of the index they track.

Defendant’s clients, however, were not seeking speculative investments. As of 2020, their average age was 71. All but one identified their risk tolerance as “moderate” or “moderately aggressive,” rather than “aggressive,” and every client identified an investment objective of “growth” or “growth & income,” rather than “speculation.” Nevertheless, said the SEC. defendant concentrated substantial portions of their accounts in the five leveraged and inverse ETFs. At the end of 2020, those investments represented 72% of the total value of the client accounts defendant managed. They still represented 63% at the end of 2021 and 58% at the end of 2022.

According to the complaint, defendant knew the risks associated with these products. The funds’ prospectuses warned investors about holding them for extended periods and explained that their performance over periods longer than a day could differ significantly, and sometimes even move in the opposite direction, from their stated investment objectives. The prospectuses also warned that investors could potentially lose their entire investment. Regulatory materials from the SEC and FINRA contained similar warnings about the risks of holding leveraged and inverse ETFs over longer periods.

The SEC alleged that defendant had reviewed and understood those warnings before investing his clients’ money. He also maintained SEC and FINRA materials concerning leveraged and inverse ETFs in his own due diligence files. Nevertheless, rather than treating the investments as short-term positions, the SEC alleged that defendant held the five ETFs in his clients’ accounts for an average of 798 days. The complaint further alleged that defendant failed to disclose certain risks and negative historical returns associated with the products, or that he held them in a manner inconsistent with the short-term holding periods described in the prospectuses and regulatory materials.

The SEC provided several examples. One client, identified as “E.P.,” was 93 years old and retired, with a “moderate” risk tolerance and a “growth & income” investment objective. Defendant allegedly invested approximately $1.247 million of her money in the five leveraged and inverse ETFs. At the end of 2020, those investments represented 74% of her accounts. According to the SEC, E.P.’s accounts ultimately lost approximately $746,000, or 60%, on the investments.

Another client, “W.S.,” was 76 years old and retired, also with a “moderate” risk tolerance and “growth & income” objective. Defendant allegedly invested approximately $351,000 of his money in three of the ETFs. By the end of 2020, those investments represented 83% of his account. W.S. closed the account in 2021 after allegedly losing approximately $235,000, or 67%, on the investments.

A third client, “C.E.,” was 81 years old and retired and had a “moderate” risk tolerance and “growth & income” objective. According to the complaint, Defendant invested approximately $462,000 of his funds in the five ETFs. In C.E.’s two accounts, the ETF positions were held for an average of 738 and 733 days, respectively. The accounts allegedly sustained approximately $310,000 in losses, or 67%, on those investments.

The SEC alleged that these examples were part of a broader pattern involving all 54 clients. On average, Defendant held the leveraged and inverse ETFs in the client accounts for 798 days, and the clients allegedly lost approximately 70% of the money they invested in those products.

Based on this conduct, the SEC alleged that defendant breached his fiduciary duties as an investment adviser by placing clients in investments inconsistent with their objectives and risk tolerances, holding those investments for extended periods despite the warnings associated with them, and failing to fully disclose material information concerning the investments and their risks.

The Settled Claims

Without admitting the allegations, Defendant consented to the entry of a final judgment, subject to court approval, that would permanently enjoin him from violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act; enjoin him from acting as or associating with an investment adviser for two years; and impose a civil money penalty of $100,000.

In a related administrative proceeding, the SEC instituted settled proceedings against United Planners arising out of the same conduct.

Takeaway

The SEC’s enforcement action highlights an important point about financial elder abuse: exploitation of older investors does not necessarily involve stealing or misappropriating their money. It can also involve the manner in which a financial professional manages an elderly client’s savings, particularly where the adviser has discretion over the account and the client depends on the adviser to make investment decisions consistent with his or her needs and tolerance for risk.

The allegations also underscore why an investor’s age, investment objectives, and risk tolerance matter. According to the SEC, defendant’s clients had an average age of 71, none identified speculation as an investment objective, and all but one reported a risk tolerance below “aggressive.” Yet substantial portions of their accounts were allegedly concentrated in leveraged and inverse ETFs that carried significant risks, particularly when held for extended periods. For elderly and retired investors who may have less time or ability to recover from substantial losses, the consequences can be particularly severe.

The case further illustrates that the risks associated with an investment cannot be separated from how the investment is actually used. The SEC’s allegations do not rest simply on the fact that defendant purchased leveraged and inverse ETFs. Rather, the complaint focuses heavily on the concentration of those investments in his clients’ accounts and how long he allegedly held them. Products designed around short-term or daily investment objectives can present very different risks when held for months or years. Here, the SEC alleged that investments accompanied by warnings about extended holding periods were held for an average of 798 days.

Disclosure is equally important. An adviser with discretionary authority may make investment decisions without obtaining the client’s approval for each transaction, but that discretion does not eliminate the adviser’s fiduciary obligations. According to the SEC, defendant knew of the warnings contained in the funds’ prospectuses and regulatory materials but failed to fully disclose certain risks, negative historical returns, and the consequences of holding the products for extended periods. The allegations therefore demonstrate why meaningful disclosure involves more than identifying the investment being purchased. Clients need material information about the risks associated with the investment strategy being employed with their money.

Finally, the case highlights several circumstances that can be important in identifying potential financial elder abuse, including the nature of the investments held, the concentration of those investments within an account, whether they are consistent with the investor’s stated objectives and risk tolerance, and whether the investment strategy reflects the investor’s age and circumstances. Significant concentrations in complex or unusually volatile products, departures from an investor’s stated objectives, and substantial unexplained losses are among the circumstances that may raise concerns about the treatment of an elderly investor’s assets.

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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 or litigation releases and not on matters handled by the firm.

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