July 10, 2018 Articles

Two New FINRA Rules for the Protection of Senior Investors

The changes call for proactive steps to protect seniors and other vulnerable customers from financial exploitation

John E. Clabby and Michael A. Gross

The protection of senior investors continues to be a priority for the Financial Industry Regulatory Authority (FINRA), from both an examination perspective and an enforcement perspective. In fact, FINRA detailed how seniors are one of its major areas of concern in the last three editions of its Annual Regulatory and Examination Priorities Letter.

Certain rule changes that took effect February 5, 2018, have equipped FINRA members with new tools to protect senior and other vulnerable investors from financial exploitation. First, members may now place temporary holds on disbursements from accounts when they reasonably believe that financial exploitation has occurred, is occurring, or has been, or will be, attempted. Second, members must now solicit a trusted contact person for each retail customer account, and they may contact that person to address possible financial exploitation.

This article discusses the new rules and provides insight on how members might expect the rules to affect examinations, enforcement actions, and customer claims.

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