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FINRA Pitches Safe Harbor For Firms Flagging Investor Exploitation

Joe Mont | September 18, 2015

The Financial Industry Regulatory Authority’s Board of Governors has advanced proposed rulemaking that would allow the firms it oversees to place a temporary hold on a disbursement of funds or securities and notify a customer's designated contact when it has a reasonable belief that financial exploitation is occurring. The rule is intended to help protect seniors and other vulnerable adults from financial exploitation.

The proposal would amend FINRA's customer account information rule to require firms to make reasonable efforts to obtain the name and contact information for a trusted contact person upon opening an account. It would also create a new FINRA rule permitting firms to place temporary holds on disbursements of funds or securities, from the accounts of investors aged 65 or older, if there is a reasonable belief of potential exploitation. The proposal would also apply to investors 18 and older if they have mental or physical impairments.

The new FINRA rule...

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