Peter Doelger founded a Boston-based company in the 1970s which helped homeowners nationwide lower their energy bills through a network of contractors tasked with focusing on the homeowners’ attic insulation and windows. Honeywell bought the business in 1995 for an eight-figure amount.1 Peter took the proceeds of the sale and added various assets to his investment portfolio, eventually amassing $50 million at the age of 78. In just over five years, he and his wife had only $1.5 million. Today they are living with relatives and are in a Boston federal court battle with J.P. Morgan Chase, the couple’s asset manager.
The Doelger’s current financial situation is similar to a perfect storm, where a number of negative and unpredictable factors converged to create a critical state of affairs. One of the negative factors is the fact that the financial services industry doesn’t have a formal system to detect cognitive decline in investors. “This case screams out for more attention to how waning cognitive abilities affect older people’s capacity for financial decision-making and independent financial management,” Naomi Karp, a former analyst for the Consumer Financial Protection Bureau, told Bloomberg.2 “We need to put more responsibility on financial firms since they are well-positioned to detect warning signs.” J.P. Morgan Chase claims that they were never made aware of Peter’s cognitive decline.
The bulk of the Doelger’s investments with J.P. Morgan Chase were in Master Limited Partnerships (MLPs), which are “exchange-traded investments that typically hold cash-generating assets such as oil and gas properties or pipelines.”3 J.P. Morgan claims it warned Peter that MLPs were a risky investment, urging him to diversify his portfolio. From 2009 to 2014 Peter’s MLP investments brought him tens of millions of dollars, but then energy market volatility and the COVID-19 pandemic hit. His portfolio value plunged 19 percent by the end of 2015 to about $30 million and plunged an additional 24 percent in a single day on March 9, 2020. All of the Doelger’s remaining assets were used to pay off a J.P. Morgan Chase bank loan of $10 million that Peter Doelger received over the years to fund his investments. In their lawsuit the Doelger family claims that J.P. Morgan Chase kept Peter in these risky investments and continued to loan him money so they could charge high management fees and interest.
The U.S. Securities and Exchange Commission (SEC) regulations have provisions for “accredited” or “sophisticated” investors which qualify those investors to buy into riskier, complex asset classes with large commissions for intermediaries. With baby boomers holding nearly half of all wealth in the U.S., amounting to $78 trillion in assets according to the Federal Reserve, many baby boomers have enough assets to be considered “accredited” investors under SEC regulations.4 J.P. Morgan claims not only was it acting on Peter’s wishes to take investment risks but he also signed a letter in 2015 stating his sophistication and interest in making such risky investments.
As investors age, most investment advisors recommend that investors lean toward conservative investments that are safer investment options such as bonds, high-yield savings accounts, certificates of deposit, Treasury bills, money market accounts and fixed annuities. 5 This investment strategy would most likely have saved the bulk of the Doelger’s fortune so they could live out their retirement years in comfort and with peace of mind. ####
If you have questions about the management of your financial investments or suspect broker negligence, an experienced securities lawyer will fight for and protect your rights as an investor. Call our Michigan Securities Law Firm and speak to an attorney about the management of your investments today.
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1,2 JP Morgan Is in a Fight Over Its Client’s Lost $50 Million Fortune by Tom Schoenberg, 12/11/2023
Link: https://www.bloomberg.com/news/features/2023-12-12/jpmorgan-client-with-dementia-loses-50-million-in-5-years?leadSource=uverify%20wall
3, 4, 5 Family Says Man with Dementia Lost His $50 Million Fortune in Risky Investments by Bethan Moorcraft, 12/29/2023
Link: https://www.msn.com/en-us/money/markets/family-says-man-with-dementia-lost-his-50-million-fortune-in-risky-investments-now-theyre-suing-jpmorgan-to-recoup-his-wealth-heres-what-baby-boomers-can-learn-from-this-case/ar-AA1mclP7