FINRA rule changes that seek to limit the financial exploitation of seniors and vulnerable adults went into effect this week.
One of the changes states that firms are now required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. The trusted contact person is a resource for firms in responding to possible financial exploitation of any vulnerable investors.
The other rule permits FINRA member firms to place a temporary hold on a disbursement of funds or securities when they believe there is financial exploitation, and notify the trusted contact of the hold. This will allow firms to investigate the matter and reach out to the customer and/or trusted contact before disbursing funds.
“These important changes, developed in collaboration with our members, provide firms with tools to respond more quickly and effectively to protect seniors and vulnerable investors from financial exploitation,” Robert Colby, FINRA’s chief legal officer, said. “With the aging of the U.S. population, financial exploitation is a serious and growing problem, and protecting senior investors remains a top priority for FINRA.”
The changes were approved by the SEC in February 2017. FINRA set the effective date one year in advance to give firms time to adequately prepare for them.