The New FINRA Rules and the Effect on Senior Financial Abuse.
Seniors and even some adults all over the United States are constantly faced with issues of financial exploitation. In an effort to protect seniors and reduce this financial abuse the Financial Industry Regulatory Authority, “FINRA”, adopted two rules last February: Rule 2165 (Financial Exploitation of Specified Adults) and Amendments to Rule 4512 (Customer Account Information).
Temporary Hold: The first of these, Rule 2165, allows members, who reasonably believe that a customer has been financially exploited, is currently or will soon be financially exploited, to place a temporary hold on securities or disbursement of funds from the account of a “specified” adult customer. Under the rule’s definition of a “specified adult” any natural person 65 years or older qualifies. If this temporary hold is placed, it is for a maximum of 15 days and requires that the member begins an immediate internal review of the customer’s account. Additionally, notification of the hold and the reasons for the hold must be provided to the customer, trusted contact, and any party authorized to do business on the account, unless they are suspected to be engaged in the financial exploitation. While this hold is completely voluntary and up to the discretion of the financial advisor or broker, it is in the right direction for taking the steps to reduce elder financial abuse.
Trusted Contact: The second adoption is an amendment to rule 4512, which upon the opening of a new non-institutional customer account, or in updating an existing account, requires members to make reasonable efforts to obtain the name and contact information of a trusted person for the customer. Simply asking a customer to provide this information would typically qualify as making the reasonable effort to obtain a trusted contact. This is intended to act as a resource for the member in managing and administering funds in the account and an additional contact in the event of a possible financial exploitation.
Soon we should begin to see the effects of these two rules and whether or not they effectively protect seniors in financial fraud.
You can find more information, definitions, and supplemental material for each rule at FINRA.org.
https://www.finra.org/sites/default/files/Regulatory-Notice-17-11.pdf