The Financial Industry Regulatory Authority (FINRA) announced that its Board of Governors approved a rulemaking item to help firms better protect seniors and other vulnerable adults from financial exploitation. The proposal would allow a firm to place a temporary hold on a disbursement of funds or securities and notify a customer’s trusted contact when the firm has a reasonable belief that financial exploitation is occurring.
The proposal would amend FINRA’s customer account information rule to require firms to make reasonable efforts to obtain the name and contact information for a trusted contact person upon opening a customer’s account.
In addition, the proposal would create a new FINRA rule permitting firms to place temporary holds on disbursements of funds or securities, from the accounts of investors aged 65 or older where there is a reasonable belief of financial exploitation. The proposal would also apply to investors 18 and older if they have mental or physical impairments that render them unable to protect their own interests and there is a reasonable belief of financial exploitation.
This new FINRA rule would not create a duty to place temporary holds on disbursements. Rather, it would provide firms with a safe harbor when they exercise discretion in placing temporary holds on disbursements.
FINRA plans to issue a Regulatory Notice soliciting comment on this proposal within the next several weeks.
On April 20, 2015, FINRA launched a toll-free senior hotline – 1-844-57-HELPS – to provide older investors with a supportive place to get assistance from knowledgeable FINRA staff related to concerns they have with their brokerage accounts and investments. To date, FINRA has received over 1500 calls on issues including how to find information on their brokers, calls from children of deceased parents trying to locate assets or having difficulty moving assets from a brokerage firm, concerns from seniors ranging from routine poor service complaints to routine sales practice issues at firms, and fraud raised by a senior and/or child on behalf of senior investors.
For more information go to FINRA.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.