FINRA Issues FAQ On Senior Exploitation Rules
From the Desk of Jim Eccleston at Eccleston Law:
The Financial Industry Regulatory Authority (FINRA) has released a frequently asked questions (FAQ) guidance on new rules the regulator has enforced pertaining to financial exploitation of seniors. FINRA recently amended Rule 2165 (Financial Exploitation of Specified Adults) to permit broker-dealers to:
- place a hold on a securities transaction (in addition to the already permitted hold on a disbursement of funds or securities) where there is a reasonable belief of financial exploitation; and
- extend a temporary hold on a disbursement or transaction for an additional 30 business days, beyond the current maximum of 25 business days (for a total of 55 business days), if the member firm has reported the matter to a state regulator or agency, or a court of competent jurisdiction.
FINRA additionally adopted Rule 4512 (Customer Account Information), which compels member firms to make reasonable efforts to collect contact information for a trusted contact person for each client’s account. FINRA’s guidance indicates that Rule 2165 permits member firms “to place a temporary hold on a securities transaction or disbursement of funds or securities from the account of a specified adult where there is a reasonable belief of financial exploitation.” The FAQ also discussed the qualifications for who may serve as a trusted contact person pursuant to Rule 4512. A trusted contact person must be over the age of eighteen. However, Rule 4512 authorizes joint accountholders, individuals with power of attorney, and trustees to serve as a trusted contact person.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
