FINRA Files Rule Proposal with SEC to Protect Seniors


Last updated 10/27/2016 at 6:54pm | View PDF

The Financial Industry Regulatory Authority (FINRA) submitted to the Securities and Exchange Commission (SEC) proposed rules addressing the financial exploitation of seniors and other vulnerable adults.

FINRA is proposing amendments that would require firms to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account.

In addition, FINRA is proposing a new rule that would permit firms to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold. The rule change is not effective until approved by the SEC.

Currently, FINRA’s rules do not explicitly permit firms to contact a non-account holder or to place a temporary hold on disbursements of funds or securities where there is a reasonable belief of financial exploitation of a senior or other vulnerable adult.

“If approved by the SEC, this proposed rule change will equip firms with more effective tools to better protect their senior and other vulnerable customers from financial exploitation,” said Robert L.D. Colby, FINRA executive vice president and chief legal officer. “With the aging of the investor population, FINRA believes it is important to put these protections in place for our seniors and other vulnerable investors.”

FINRA, the Financial Industry Regulatory Authority, regulates all securities firms doing business in the United States.

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