Helaine’s Blog

When Larry Hagman Met the Financial Services Industry

November 25th, 2012 | via Forbes.com

On television, actor Larry Hagman played Texas wheeler-dealer J.R. Ewing on the hit show Dallas. No one ever got the better of lyin’, cheatin’ J.R. Ewing.

In real life Hagman, who died Friday at the age of 81, was not so lucky.

According to MetLife, one in five Americans over the age of 65 will either be sold an inappropriate investment for their circumstances, charged too much in fees on their money or become the victims of out-and-out financial fraud. Their number included Hagman, who spent the last several years of his life as a real-life demonstration of what happens to more than a few of our nation’s seniors when they encounter our financial services system.

Larry Hagman’s problems began in 2005, when he and his wife Maj transferred 20 accounts from the their longtime registered investment adviser to Lisa Detanna, a broker with Citigroup, whom they had met via a friend.  They asked Detanna to invest their funds conservatively. Instead, their new broker took their portfolio –which was mostly invested in bonds – and turned it upside down. By the time the financial crisis hit in 2008, more than two-thirds of the couple’s funds were invested in stocks. As if this were not enough, Detanna also sold the couple a life insurance policy with a hefty $168,000 yearly premium — more money than the couple could afford to pay on an annual basis.

Larry and Maj Hagman’s financial loss was in the seven figures.

“He’s just a lovely man who trusts people,” Hagman’s attorney Phil Aidikoff told me when I interviewed him last year. “If a professional says ‘this is what you do,’ he says ‘okay’ and he does it.”

The same, alas, can be said for all too many of the elderly. Many experts in the area believe that such situations will only become more common in the future, as more and more Americans will be retiring not with pensions, but with the lump sum distributions from their 401(k)s. Not only do most of us lack the financial smarts to determine whether an adviser or investment is right for us at any age, studies have shown whatever ability in the area we have peaks in our fifties. Half of those who live past the age of 85 will suffer from a cognitive impairment, a group that includes Maj Hagman, who was diagnosed with Alzheimer’s Disease in 2008.

In one way, Hagman was luckier than most. He was able to hire longtime securities industry legal nemesis Aidikoff to defend his interests. A Financial Industry Regulatory Authority arbitration initially awarded Hagman and his wife a multi-million dollar settlement from Citigroup (Detanna was not named in the suit, but it was her actions that were the subject of the case), but the judgment was overturned on appeal. An out-of-court confidential settlement was reached in 2011, less than two years before the actor’s death.

The Consumer Financial Protection Bureau is studying what can be done to better protect our nation’s elderly from such situations, but has yet to make any recommendations.

As for Detanna, she is now a senior vice-president at Raymond James & Associates. In the press release issued when she joined the firm earlier this year, Detanna is quoted as saying she joined the company because it is “grounded in core values such as conservatism, independence and integrity.” There was no mention of Larry and Maj Hagman.

Addendum: As this has come up in the comments, I need to note that the original ruling in this case was overturned because one of the arbitrators failed to disclose his involvement in a similar filing several years earlier. It had nothing to do with the actions of Larry or Maj Hagman, Lisa Detanna or Citigroup.

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