FINRA Files Rule Proposal With SEC to Protect Seniors and Other Vulnerable Adults From Financial Exploitation

WASHINGTON–(BUSINESS WIRE)–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.

Robert L.D. Colby, FINRA Executive Vice President and Chief Legal
Officer, said, “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. 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.”

Susan Axelrod, FINRA Executive Vice President, Regulatory Operations,
added, “The need for this rule became clear from calls to the
FINRA Securities Helpline for Seniors^®. Since its launch
in April 2015, the helpline has received calls highlighting some of the
issues firms are facing when it comes to senior investors, including how
firms respond when they suspect a senior customer is being exploited.”

FINRA also plans on amending its New
Account Application Template –a voluntary model brokerage account
form that is provided as a resource to firms when they design or update
their new account forms –to capture trusted contact information.

Once the proposal is filed with the SEC, SEC staff reviews the rule
proposal to determine whether it is consistent with the requirements of
the Securities Exchange Act of 1934 (Exchange Act). The SEC staff may
request changes or amendments to the rule proposal.

FINRA, the Financial Industry Regulatory Authority, regulates 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 (FINRA)
Michelle
Ong (202) 728-8464
or
Nancy
Condon (202) 728-8379