Digital Assets

Online Education for Older Adults – Really, for ALL Of Us

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Have you heard of, or been the target of, an online scheme?  Of course you have!

  • Warning!  Your Account Has Been Locked
  • Fake Government Threats From the IRS or FBI About Your Misdeeds
  • Alleged Problems With Your Bank Account with “Vishing” (voice phone hacking)
  • Demands For An Extended Car Warranty
  • Text Message Scams (“Smishing”)
  • Online Dating or Sweetheart Scams

The potential list is much longer than the one above, but with the number of cyberattacks and scams increasing over the pandemic, we must be diligent to protect ourselves and our elders. A detailed online article is available through Berkeley

You will learn not only to recognize the warning signs, but also how to protect yourself by changing your passwords and using strong passwords, contacting your credit bureau and banks, asking for support if you need it, scanning your system for malware, disconnecting your device so malware does not spread, being careful about giving away information, noticing odd emails and avoiding the “too-good-to-be-true” offer.

With respect to assisting older online users, they recommend, “If you want to help your older relatives stay safely connected online during these difficult times, make a point to offer your support.  Set aside an hour or two to talk through online safety protocols with your family member, explain the risks they face online and point out a few common red flags that they might need to look out for.”  You can use the article as an excellent launching point, and since your elders took such good care of you, isn’t it time you return the favor?

Investor Alert – Fraudsters Target CARES Act Retirement Savings Relief

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If you are considering using provisions under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to withdraw and reinvest money from your retirement savings, be aware that fraudsters may be targeting you. Be wary when someone encourages you to use your retirement savings to make new investments. When considering new investments, do your own research and consider contacting an unbiased investment professional or an attorney.

CARES Act Retirement Savings Benefits

The CARES Act includes provisions designed to provide relief for individuals who are financially impacted by the COVID-19 pandemic. Among these provisions are relief efforts that allow individuals to pay back amounts withdrawn from qualified retirement plans without paying income tax on the withdrawal. The CARES Act also allows individuals to take out larger retirement plan loans with limited income tax consequences. For those suffering financial hardship, the CARES Act benefits can provide much-needed liquidity. Unfortunately, fraudsters and dishonest promoters are using this crisis to encourage investors to make high risk or high fee investments that may not be in the investor’s best interest.

How Fraudsters Are Targeting Retirement Savings

Promoters or investment professionals may contact you with a recommendation that you take advantage of the CARES Act benefits to withdraw money from your retirement savings and invest that money. If you have been contacted with such a recommendation, be very wary. The individual who contacted you may be part of a predatory scheme to profit off your retirement savings. Always be sure to verify that the person you are speaking with is licensed to give advice or sell investments. Contact your state securities regulator or use these free tools from the SEC and FINRA to verify the license and history of an investment professional.

Important Considerations for Using Your Retirement Accounts to Make New Investments

There are several important drawbacks you should consider before you use retirement funds to make new investments. The promoter may charge you high fees. Inquire how much of your money will be invested for you and how much will go to the person managing the investment. Liquidity – whether you can easily cash out of the investment – can be very important in today’s uncertain environment. Make sure to ask whether there are any fees for early withdrawal or sale. Consider the current value of your retirement investments. If the market is down when you withdraw retirement savings, you may not recover those losses when the market rebounds. If you invest the money that you take out as a loan from your retirement savings, you may have difficulty repaying the loan if the investment performs poorly.

Darlene Pasieczny, AttorneyDarlene Pasieczny is a fiduciary and securities litigator at Samuels Yoelin Kantor LLP.  She represents clients in Oregon and Washington with matters regarding trust and estate disputes, financial elder abuse cases, and securities litigation. She also represents investors nationwide in FINRA arbitration to recover losses caused unlawful broker conduct.  Her article, New Tools Help Financial Professionals Prevent Elder Abuse, was featured in the January 2019, Oregon State Bar Elder Law Newsletter.

Featured image courtesy of SYK paralegal Torrie Timbrook.

Digital Assets Webinar: Springwater Wealth Management & Michael Walker

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“Do you have an estate plan? Is it complete? Does it address your digital assets? A digital asset is content that is stored electronically. Digital assets include images, videos, files and credentials. If it’s stored on your computer, your phone or in the cloud, it’s a digital asset. ”

Springwater Wealth Management and SYK attorney Michael Walker will be hosting a virtual webinar on July 22nd. The education webinar aims to educate others about digital assets. If you have questions, now is a great opportunity to get them answered, and learn more about what digital assets really are, and when they need to be addressed in your estate planning. Registration for the webinar is free, but limited. Be sure to register early to guarantee your stop.

SYK Attorney Darlene Pasieczny to Moderate “Hybrid Advisers” Panel

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Hybrid Advisers: Regulation and Claims Regarding Dual‐Registered Brokers and RIAs

Moderator, Darlene Pasieczny, Samuels Yoelin Kantor LLP; Speakers Jeffery Schaff, Ardor Fiduciary Services, Ltd., and James Wrona, VP and Associate General Counsel, FINRA.  This panel will explore issues in regulation and customer dispute resolution when a culpable financial adviser “wears two hats” as both a FINRA‐licensed broker and SEC‐licensed registered investment adviser. When is the brokerage firm responsible for conduct by its dual‐registered associated person? How do FINRA and the SEC parse enforcement issues for these hybrid advisers? The panel will discuss trends in customer arbitration cases, recent case law decisions, compliance and enforcement.

Tuesday, October 9, 2018

Securities Law Seminar at the 27th PIABA Annual Meeting

Bonita Springs, Florida

Find registration information here.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, as well as fiduciary litigation in trust and estate disputes, and elder financial abuse.

Investor Alert – NASAA and SEC Warn about Cryptocurrency Related Investments

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Investor Defenders

On January 4th, the same day I posted about a recent FINRA Investor Alert regarding cryptocurrency, there was a new press release from the North American Securities Administrators Association (NASAA) with further guidance on the same topic. NASAA’s analysis and warning amounts to this: Initial Coin Offerings (“ICOs”), and all other investment products related to cryptocurrency or the blockchain, pose a threat to investors.

“A NASAA survey of state and provincial securities regulators shows 94 percent believe there is a ‘high risk of fraud’ involving cryptocurrencies. Regulators also were unanimous in their view that more regulation is needed for cryptocurrency to provide greater investor protection.”

The same day, the SEC made a public statement from Chairman Jay Clayton and Commissioners Kara M. Stein and Michael S. Piwowar, in wholehearted agreement with NASAA:  “The NASAA release also reminds investors that when they are offered and sold securities they are entitled to the benefits of state and federal securities laws, and that sellers and other market participants must follow these laws. Unfortunately, it is clear that many promoters of ICOs and others participating in the cryptocurrency – related investment markets are not following these laws. The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment.”

“High risk of fraud”? That’s a polite understatement. The conditions in this cryptocurrency market are the perfect conditions for bad actors to harm investors and cause investment losses. How? Fraud through market manipulation. Fraud through technical manipulation. Fraud through plain theft. Adverse terms and conditions on a clickthrough agreement. Technical failure, incompetence, malfeasance on the part of the provider. Cyberthreats from third parties online, vandals or burglars. Misrepresentations of the real possibility that cryptocurrency is an object of temporary interest, the bubble will pop, and prices will drop.

And, of course, bad actor conduct includes flawed recommendations by financial advisors to jump in and buy these new, complicated products related to cryptocurrency. If your portfolio contains investments that, on closer examination, are not plausible or not understandable, that’s one of the ten red flags of financial fraud.

As a securities attorney, I represent investors nationwide who have lost money due to the conduct of a financial professional or a defective investment product.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations.  Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose financial losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or if your broker has stopped returning your calls, contact me for a free, confidential consultation at 1-800-647-8130.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice also includes representing investors nationwide in investment disputes. To read more about her cases and the results she gets, visit our Investor Defenders site.

Australian Court Accepts Unsent Text Message as Dead Man’s Will

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A court in Queensland, Australia accepted an unsent text message on a dead man’s phone as his valid will. In the text message the married man left everything he had to his brother and nephew before taking his own life. The court allowed the draft text message to act as a valid will because the wording in the text indicated that the man intended it to act as his will.

Formal will requirements in Queensland require that a valid will be in writing and signed by two witnesses, however the law was changed in 2006 to allow informal types of documents to be considered wills. Under the 2006 changes, the Supreme Court of Queensland may recognize a document as being a will if the court is satisfied that the decedent intended the document to be his will even if the document lacked will formalities.

In Oregon, formal will execution requirements are that a will be in writing, signed or acknowledged by the testator in the presence of two witnesses. The two witnesses must also attest the will by signing their own names to the will within a reasonable time before the testator’s death. The will being in “writing” does not include an electronic record, document or image.  (See ORS 112.235.)

Oregon law does provide an exception to the formal will execution requirements. A writing may be treated like a properly executed will if a court is convinced the evidence shows that the decedent intended the writing to be the decedent’s will. (See ORS 112.238.) However, since a “writing” does not currently include electronic writings, an Oregon court may hesitate to rule that a text message or another electronic document intended to be a will is a valid will. (See ORS 112.235(4).)

Will electronic wills be in our future? Nevada has already enacted a law that authorizes electronic wills, (See NV Rev Stat § 133.085 (2013).), but while in 2017, several other states sought to enact legislation to allow electronic wills, that legislation failed.

In October 2017, the Uniform Law Commission Drafting Committee on Electronic Wills (“ULC”) met in Philadelphia. Victoria Blachly, a Trust and Estates partner with Samuels Yoelin Kantor LLP, attended the meeting. The views of the various stakeholders around the table were varied, but with the constant pressure of technology pushing for convenience, change is in the wind. The ULC has a deliberate and thorough process that takes at least two years before suggesting new potential legislative language, so it remains to be seen what the organization will support. Will convenience prevail over concerns of abuse?  Will technology serve to make estate planning easier or cause more problems? Stay tuned.

Special thanks to guest SYK author Daniela Holgate. Daniela is a 3L and 2018 J.D. candidate at Lewis & Clark Law School.

Bitcoin – Is It Really Money?

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Is bitcoin money?

Florida court dismisses money-laundering case, saying that bitcoin is not money.

Recently, a Florida judge dismissed a money laundering charge against a man who sold $2,000 worth of bitcoin to an undercover agent. The agent claimed he was using the bitcoin to purchase stolen credit card numbers. The judge held that the digital currency is not money. Therefore, it does not fall within Florida’s money laundering statute. The judge stated that trying to regulate bitcoin using a statutory scheme regulating money is “like fitting a square peg in a round hole.” This leaves the door wide open for the Florida legislature to regulate bitcoin and other virtual currency.

Bitcoin was released in 2009. Since that time, courts and legislatures have struggled to fit it into existing legal framework. There are few laws or regulations specifically governing bitcoin and its price fluctuates widely. One expert witness compared bitcoin to “poker chips that people are willing to buy from you” (this expert was paid in bitcoin to appear as a defense witness). The currency isn’t printed, like the euro or the U.S. dollar. The IRS considers bitcoin to be property, as opposed to currency, so any exchanges are deemed to be bartering exchanges. New York now requires “BitLicenses”. They are needed for any businesses that buy, sell, or process bitcoin in the state. New York institutes a multitude of consumer and fraud protections on the businesses. Most notably, the business will have to maintain records of their customers’ names and addresses. This eliminates the anonymity that made bitcoin so appealing in the first place.

It is not just the US that struggles to define bitcoin. In Australia, bitcoin is double taxed. That is because in the country it is considered to be a commodity, not a currency. There is a 10% tax when consumers purchase the currency. They are taxed again when consumers use the bitcoin to purchase goods. Bitcoin is exempt from value-added tax (VAT) in many European countries, indicating that they do not see it as a good but instead as a legitimate currency. In Switzerland, the city of Zug is allowing citizens to pay for public services using virtual currency.

While the trend certainly seems to be towards treating bitcoin as currency, there is still plenty of uncertainty as to what its future will look like. The Florida case may have set precedent for how the rest of the United States will treat virtual currency. It may also encourage legislators to create more laws regulating bitcoin. Only time will tell.

Be Alert: Join the Oregon Scam Alert Network

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Scam Alert Network

The Oregon Department of Justice wants to help you stay alert for consumer issues.

How many emails do you get every day? Here’s an opportunity to sign up for email alerts that will provide value – and protection – for you and your clients. The Oregon Department of Justice has a free email alert, to notify us of emerging scams, fraud and other consumer problems. As they explain, “We will keep you updated about important consumer information to educate and protect your friends, family, coworkers and anyone else before they fall victim to scams and fraud.”

Past alerts have included phone tax collectors, ransomware and counterfeit tickets.

Now… stay safe out there.

Oregon First to Pass RUFADAA – Allowing Legal Access to Your Digital Assets

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Oregon becomes the first state to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act.

SYK has been advising our clients, friends and colleagues about managing Digital Assets (your online accounts) for many years, lamenting the fact that the Internet was outrunning the law. We’ve been writing about it, testifying before legislators, speaking at seminars and encouraging everyone to prepare a VAIL – or Virtual Asset Instruction Letter. 

We are happy to report that there is new light on the issue. Oregon has just become the first state in the nation to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act. Oregon Senate Bill 1554 was signed by the Governor yesterday and will become effective January 1, 2017.

This law is important in that while it allows for personal representatives, powers of attorney and trustees to have access to online accounts to perform their fiduciary duties, it also requires everyone to be proactive in affirmatively stating in your trust or estate plan that you grant such authority; otherwise, the online providers’ terms of service agreements will control. And those agreements often give the online provider all of the power, including the power to hit “delete” when they know someone has passed, which could destroy vital financial information or precious memories you had intended to share with those you leave behind.

So dust off that will or trust you prepared so long ago and call your estate planner; it’s time that your estate plan caught up with the Internet.

Attorney Victoria Blachly is a fiduciary litigator who has been working on digital asset legislation for six years, testifying before legislators and presenting at seminars throughout the U.S. The issue became very personal to her when she lost a young niece and saw how invaluable her social media was to the grieving family and friends she left behind. Victoria worked closely with one of SYK’s estate planners, Jeff Cheyne, and one of SYK’s business attorneys, Michael Walker, to pursue legislation that was initially hard fought by very large and well-funded online providers.

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