FINRA Board Approves Rulemaking Item to Protect Seniors and Other Vulnerable Adults from Financial Exploitation

WASHINGTON–(BUSINESS WIRE)–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.

“Each day for the next 15 years, an average of 10,000 Americans will
turn 65. Seniors are at risk, and FINRA is committed to helping protect
seniors and other vulnerable adults from financial exploitation. This
proposal is an important step forward that would benefit both investors
and firms,” said Richard Ketchum, FINRA Chairman and Chief Executive
Officer.

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.

FINRA, the Financial Industry Regulatory Authority, is the independent
regulator for all securities firms doing business in the United States.
FINRA is dedicated to investor protection and market integrity through
effective and efficient regulation and complementary compliance and
technology-based services. FINRA touches virtually every aspect of the
securities business—from registering and educating all industry
participants to examining securities firms, writing rules, enforcing
those rules and the federal securities laws, and informing and educating
the investing public. In addition, FINRA provides surveillance and other
regulatory services for equities and options markets, as well as trade
reporting and other industry utilities. FINRA also administers the
largest dispute resolution forum for investors and firms. For more
information, please visit www.finra.org.

Contacts

Financial Industry Regulatory Authority
Nancy
Condon
, 202-728-8379