When Is a Bank or Broker Liable for an Elder’s Losses in California?
When a parent loses money — to a phone scammer, to a relative with access to the accounts, or to an investment strategy that never fit their age — the family’s next question is usually whether the bank or brokerage that moved the money shares any of the responsibility. Under California law the answer turns mostly on what the institution knew, or should have known, at the time, and on whether it was taking money for itself or processing someone else’s instructions.
This is a narrower follow-on to Financial Elder Abuse in California: What the Law Lets You Recover, which covers the claim generally. Here the focus is the financial institution.
Two ways an institution can be responsible
California’s Elder Abuse and Dependent Adult Civil Protection Act protects anyone residing in the state who is 65 or older. Its definition of financial abuse reaches any “person or entity” — which includes a bank, brokerage, or advisory firm — in two distinct roles:
- Taking. The institution itself takes, obtains, or retains the elder’s property for a wrongful use, with intent to defraud, or by undue influence. Fees and commissions can count.
- Assisting. The institution assists someone else — a scammer, a caregiver, a family member — in taking the elder’s property for a wrongful use or with intent to defraud.
A taking is “for a wrongful use” if the person or entity knew or should have known the conduct was likely to be harmful to the elder. A taking occurs whenever the elder is deprived of any property right, including by means of an agreement, whether the property is held directly or by a representative such as a trustee.
A new published decision: DeVone v. Morgan Stanley
On October 8, 2026, the Second District Court of Appeal decided DeVone v. Morgan Stanley & Co. LLC (B339219), and on October 29, 2026 it certified the opinion for publication. A self-taught investor traded stock options through the same firm and adviser for decades and died in 2012 at 93. His trustees and the personal representative of his estate sued the firm and the adviser for breach of fiduciary duty and financial elder abuse, alleging the options strategy and its commissions continued after his cognitive decline. After the plaintiffs presented their evidence at trial, the trial court granted nonsuit — ending the case before the defense put on its own evidence — largely because the account had grown in value.
The Court of Appeal reversed in part. In summary:
- No net loss is required for an elder abuse claim. The “knew or should have known” standard looks at what the defendant knew when it acted, not at how the investments turned out. Commissions taken on a strategy the defendant should have known was likely harmful can be a taking even if the account went up.
- The elder abuse claim should have gone to the jury. The court pointed to the plaintiffs’ evidence of notice of the client’s cognitive impairment and testimony about the industry practice of escalating diminished-capacity concerns to supervisors.
- The statute of limitations is not a backward-looking damages window. A claim found timely under the discovery rule is not limited to recent conduct, and disputed questions about when the family should have discovered the claim belong to the jury.
- The fiduciary duty claim was split. Nonsuit was affirmed on the excessive-trading (“churning”) theory, because the plaintiffs offered no opinion testimony measuring the commissions against an industry benchmark and breach of fiduciary duty, unlike elder abuse, requires proof of actual damage. It was reversed on the theory that the adviser’s duty reached tax and estate-planning advice, because the scope of that duty depends on the whole course of dealing.
The court stressed that the evidence does not compel a finding of liability and that the defendants presented substantial contrary evidence. The case returns to the trial court; the decision is not a finding that anyone did anything wrong.
When a scammer or relative is the one taking
DeVone concerns an institution collecting its own commissions. The more common family situation is different: a parent tells the bank to wire money to a stranger, or a relative with access drains an account, and the bank follows instructions. That is an “assisting” theory, and it is generally harder.
In Das v. Bank of America (2010), a father wired more than $300,000 to accounts abroad in a series of scams, and his daughter sued the bank. The Court of Appeal held that “assists” does not impose strict liability; applying the common-law aiding-and-abetting standard, the claim required allegations that the bank knew of the wrongdoing it was helping. That case applied the statute as it read before 2008 amendments, but it remains an important appellate discussion of a bank’s assisting liability. Processing a customer’s own instructions, without more, is usually not enough. What changes the picture is evidence the institution actually knew — red flags raised directly with staff, for example.
Reporting duties — and their limits
California makes all officers and employees of banks and credit unions mandated reporters of suspected financial abuse of an elder, and separately makes broker-dealers and investment advisers mandated reporters. A reporter who reasonably suspects abuse while providing financial services must report it to adult protective services or law enforcement; broker-dealers and investment advisers also report to the Department of Financial Protection and Innovation. A bank that reports suspected abuse by an agent under a power of attorney may decline to honor that power of attorney as to that agent.
A 2026 law (Assembly Bill 871, Stats. 2026, ch. 360) adds to these duties starting January 1, 2028: when a financial institution’s mandated reporter makes a report, a report must also go to the FBI’s Internet Crime Complaint Center within two working days, and the institution must notify the elder named in the report within 48 hours. Those new requirements do not carry the civil penalty that applies to a failure to report.
The catch for families: the civil penalty for failing to report can be pursued only by the Attorney General, a district attorney, or county counsel, and the reporting law expressly does not expand civil liability. In Das, the court held the family could not sue on the theory that the bank’s failure to report was negligence. A missed report may still be evidence of what the institution knew, but it is generally not a lawsuit by itself.
Brokerage firms also have a specific tool: FINRA Rule 2165 permits, but does not require, a firm to place a temporary hold on a disbursement or transaction when it reasonably believes a customer 65 or older is being financially exploited, and to notify the customer’s trusted contact person.
Remedies and the deadline
If financial abuse is proven by a preponderance of the evidence, the court shall award reasonable attorney’s fees and costs in addition to compensatory damages. If recklessness, oppression, fraud, or malice is proven by clear and convincing evidence, certain limits on damages recoverable after the elder’s death no longer apply. Where the elder lacked capacity, property taken or retained must be returned on demand by the elder or a representative, and refusing exposes the holder to the same remedies.
The claim generally must be filed within four years after the plaintiff discovered, or with reasonable diligence should have discovered, the facts constituting the abuse. As DeVone shows, when the family should have discovered the problem is often disputed — and often a question for the jury.
What an adult child can do now
If a parent in the Bay Area has lost money, a few steps generally matter most. Report suspected ongoing abuse to the county’s adult protective services agency or to the police. Collect the statements, wire records, and correspondence with the bank or adviser, and write down when each family member first learned what. Note whether anyone at the institution was told about memory problems, and when. Ask the brokerage whether a trusted contact is on file. And be realistic: when a parent personally authorized a transfer to a scammer, a claim against the institution usually turns on proof of what it actually knew.
For the claim against the person who took the money, see Financial Elder Abuse in California: What the Law Lets You Recover. If a parent can no longer manage money safely, see Conservatorship or Guardianship in California? Which One You Need.
Did a parent lose money that a bank or adviser should have caught? Ask a legal question.