Fidelity lawsuit highlights firms' vulnerability

Efforts to protect seniors from fraud, exploitation may invite legal battle

Jul 7, 2018 @ 6:00 am

By Bruce Kelly

A millionaire widow's​ lawsuit against Fidelity Investments is a good example of how a firm can be sued even as it's trying to protect an elderly client from financial exploitation.

In her lawsuit, Claudine Webb claimed that by freezing the $1.02 million in her accounts late last year, Fidelity imposed a severe hardship on her. In its response to her suit, Fidelity said it put a hold on the assets because of its concern about her mental capacity.

Ms. Webb also claimed Fidelity refused to release the funds to her neighbor, Kathleen Price, who had a power of attorney to act on her behalf. In court papers, Fidelity maintained that Ms. Price was the very person exploiting Ms. Webb. In fact, Ms. Price was later arrested and charged with financial exploitation of an elderly person, and Fidelity maintains it was a result of her interactions with Ms. Webb.

Pattie Williams, an attorney for Ms. Price, did not return phone calls seeking comment.

Although Finra's new rule went into effect prior to Ms. Webb's lawsuit in May, Ms. Webb claimed in her suit that it was not in effect when Fidelity froze her account and therefore should not apply in this case.

Ms. Webb's attorney, Alex Kaufman, declined to comment for this story.

In her lawsuit, Ms. Webb, who does not have any children, said that because of Fidelity's actions, she could not afford to pay her electric bill, go to the dentist or take her dogs to the veterinarian. She also claimed that she could not pay to have a broken pipe in her home repaired, which left her without running water. That, in turn, forced her to install a portable toilet in the house, which"created an unhygienic environment" and caused her "humiliation, inconvenience and loss of enjoyment of life," according to her lawsuit.

As for Fidelity's concern that Ms. Webb was suffering from diminished mental capacity, she produced a letter for the court from her physician of 20 years stating that she appears to be "competent and capable of making her own decision regarding any aspect of her life."

In court papers, Fidelity claimed Ms. Webb was told she could submit bills or estimates for payments directly to the firm. It also said it had released $100,000 to Ms. Webb in October 2017 and another $30,000 in January 2018.

Since Ms. Webb's lawsuit was filed, Fidelity has transferred most of Ms. Webb's funds to a new broker at UBS, as she requested, but the lawsuit is ongoing. Ms. Webb is seeking both compensatory and punitive damages.

"We intend to defend [the complaint] vigorously, and like many firms we take protection of elders very seriously," said Fidelity spokesman Michael Aalto.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

2019 concerns keeping successful advisory firm leaders up at night

These are the greatest business challenges for next year, according to InvestmentNews' Best Practices honorees.

Latest news & opinion

Some good news about female recruitment in financial advice

Each of four core advisory positions tracked in InvestmentNews' benchmarking study has seen an uptick in women entrants.

10 ETFs that are up more than 35% this year

Amid the stock market carnage, there are still some funds posting big gains.

10 biggest HSA providers rated

Morningstar rated the largest plan providers as investment and spending vehicles.

Morningstar: DOL fiduciary rule reduces inflows to mutual funds with high loads

With the measure's demise, will the SEC's advice reform sustain the momentum?

6 tax strategies for year-end planning

How to help clients maximize their wealth using specific tax strategies before the end of the year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print