FINRA Enacts First National Standards to Protect Senior Investors
Two FINRA rule changes took effect yesterday that address the financial exploitation of seniors and vulnerable adults, putting in place the first uniform, national standards to protect senior investors.
Two FINRA rule changes took effect yesterday that address the financial exploitation of seniors and vulnerable adults, putting in place the first uniform, national standards to protect senior investors.
Firms are now required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. In addition, the rule permits FINRA member firms to place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold.
“These important changes, developed in collaboration with our members, provide firms with tools to respond more quickly and effectively to protect seniors and vulnerable investors from financial exploitation,” said Robert Colby, FINRA’s chief legal officer. “With the aging of the U.S. population, financial exploitation is a serious and growing problem, and protecting senior investors remains a top priority for FINRA.”
The temporary hold will allow firms to investigate the matter and reach out to the customer, the trusted contact, and possibly law enforcement or adult protective services before funds are disbursed. FINRA noted that the measure is critical because of the difficulty investors face in trying to recover funds that they have inadvertently sent to fraudsters and scam artists.
FINRA regulates brokerage firms doing business with the public in the United States and is overseen by the SEC. The regulatory body writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel, offers education and training, and informs the investing public.
