New Protections for Senior Investors

On March 30, 2017, FINRA issued Regulatory Notice 17-11 (Financial Exploitation of Seniors), announcing the SEC’s approval of amendments to the FINRA rulebook related to the financial exploitation of senior investors.  More specifically, as adopted, the amendments to FINRA Rule 4512 would require broker-dealers to make reasonable efforts to obtain the name and contact information for a “trusted contact person” for a customer’s account.  In addition, new FINRA Rule 2165 would permit (but not require) broker-dealers to place temporary holds on disbursements of funds or securities from the accounts of certain senior investors, as well as other investors with diminished capacity, when there is a reasonable belief of financial exploitation.  The FINRA notice announces an effective date of February 5, 2018, and clarifies, among other things, that the temporary hold on disbursements should not apply to securities transactions.

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