FINRA to Expand Senior Exploitation Rule

Posted on July 2nd, 2021 at 12:44 PM
FINRA to Expand Senior Exploitation Rule

From the Desk of Jim Eccleston at Eccleston Law:

The Financial Industry Regulatory Authority (FINRA) has amended a rule in order to extend the hold period and allow temporary holds on securities transactions in cases of suspected financial exploitation of seniors. The rule has been sent to the Securities and Exchange Commission (SEC) for approval. FINRA intends to change Rule 2165 (Financial Exploitation of Specified Adults) to enable advisors to extend a temporary hold on a disbursement of funds or securities for an additional 30 business days if the member firm has reported the transaction to a state regulator or a court in the appropriate jurisdiction. Additionally, advisors will be allowed to place a temporary hold on securities transactions when there is a reasonable belief of financial exploitation. 

FINRA released Regulatory Notice 20-34 in 2020, which detailed the regulator’s plan to expand the period for placing a temporary hold on accounts as well as to create the firm national standard for placing holds on transactions due to suspected financial exploitation. Currently, Rule 2165 enables advisors to place a temporary hold on a customer’s account for up to 25 business days; however, the rule change would increase the potential holding period to 55 business days. Upon approval from the SEC, FINRA will release the rule’s enforcement date in a Regulatory Notice, which is required within 180 days following the notice. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.



Tags: eccleston, eccleston law, finra, exploitation rule

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