FINRA has proposed new rules to protect senior investors and other vulnerable adults from financial exploitation. The proposed rules would require member firms to make reasonable efforts, at the time of account opening for a senior investor, to obtain the name and contact information of a trusted contact person. The proposed rules would also allow firms to place a temporary hold on a disbursement of funds or securities from the accounts of investors aged 65 or older, and to notify the designated “trusted contact,” when the firm has a reasonable belief that financial exploitation is or might be occurring. The same rule would also apply to any investor, aged 18 or older, with a mental or physical impairment that might render the investor unable to protect his or her own interests. According to FINRA, the rule would not create a duty, but rather a safe harbor for firms when they exercise discretion in placing a temporary hold on disbursements. FINRA plans to issue a Regulatory Notice seeking comment on the proposal.
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