by Lauren Tse

Abstract

This study examines the effectiveness of the 2016 NASAA Model Act, specifically if states that implemented its provisions see greater levels of elder fraud reporting. This legal reform introduces reporting requirements for broker-dealers and investment advisers to report suspected elder fraud to government authorities, granting explicit immunity to those who comply. To analyze both the immediate and longer-term effects of the Model Act’s staggered passage across states, I use a dynamic Difference-in-Difference model to analyze institutionally reported elder fraud cases from the U.S. Department of Treasury’s Financial Crimes Enforcement Network. Regression findings suggest that the Model Act has a positive enabling effect, increasing the number of elder fraud reports filed by financial professionals. Further, I quantify the monetary losses associated with these fraud cases using self-reported data from the Federal Trade Commission’s Consumer Sentinel Network. In line with this ‘placebo’ dataset, I find that the passage of the Model Act — targeted at financial professionals — has inconclusive impacts on the number of self-reported elder fraud and no effect on the financial losses incurred.

Professor Kate Bundorf, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor

JEL Codes: G28; K42; J14

Keywords: Elder Financial Fraud; NASAA Model Act; Mandatory Reporting Requirements

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