On July 19, 2019, the US Securities and Exchange Commission charged a registered investment adviser, Account Management LLC, with breaching their fiduciary duty to their largest client, a 92-year-old woman named in the proceedings as “Jane Doe.” The Commission found that the Principal of the firm, Christopher de Roetth and his 90-year-old father, Peter de Roetth, who founded the firm in 1964, had coerced Doe into amending the terms of her trust.
Doe had been a client of the firm since the ‘60s and, when the crime occurred in early 2016, had recently moved into a home for the elderly and was diagnosed with “senile dementia.” There is record of Account Management receiving correspondence from Doe’s family that she was no longer able to make informed decisions about her finances. It was also stated that a family member must be involved in the making any changes to Doe’s trust.
In January 2016, six weeks after receiving word of Doe’s memory loss, Peter de Roetth and an attorney working with Account Management visited Doe at the home for the elderly, where she was living. The pair, knowing of Doe’s inability to consent, had her sign an amendment to her trust without a family member present, drastically changing the terms of her account.
Previously, Doe had allocated 10% of her wealth to be given to a named charitable organization, also managed by Account Management, and the remaining 90% of her wealth would be distributed to three family members. The amendment she signed increased the funds given to the charitable organization to 85%, authorized the Account Management to continue control of the trust for at least twenty years, and named an attorney from Account Management as trustee.
Just hours after Peter de Roetth and the attorney’s visit, Doe had no recollection of signing any documents. When asked about the incident by her social worker, she realized what happened and claimed she had been scammed.
Peter de Roetth, with other representatives from Account Management, visited Doe several times over the preceding years, each time ending as an unsuccessful attempt to have Doe sign an amendment to continue her trust. The current Principal of the firm, Christopher de Roetth, was aware of his father’s ongoing pressure on Doe, but did not take any action to stop the activity or otherwise properly supervise Peter de Roetth and the other firm representatives.
WHAT DOES THIS MEAN FOR ME?
The Commission found that the firm Violated Section 206(2) of the Adviser’s Act, which prohibits fraudulent or deceitful behavior among investment advisers. As a result, Account Management and the de Roetths were ordered to cease and desist from further violating Section 206(2), were censured by the Commission, and made to pay $175,000 in collective civil penalties.
As the population of aging adults increases, the Commission is expanding focus on misconduct affecting this group. If your firm works with aging adults, you may be more likely to be examined by the Commission. Contact Fairview with questions about best practices when working with elderly clients.