More On Legal & Compliancefrom The Advisor's Professional Library
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
- Best Practices for Working with Senior Investors Securities examiners deal harshly with RIAs that do not fulfill their fiduciary obligations toward senior investors, as the SEC and state securities regulators view older investors as particularly vulnerable and in need of protection.
To address the rising number of elder fraud cases, the North American Securities Administrators Association said Tuesday that it has formed a new Board-level committee to tackle the “wide range of challenges” confronting senior investors, regulators and securities industry professionals.
The new Committee on Senior Issues and Diminished Capacity will be chaired by Montana Deputy Securities Commissioner Lynne Egan, and include representatives from the NASAA Board of Directors and each NASAA section — broker-dealer, corporation finance, enforcement, investment advisor and investor education — as well as Canadian securities regulators.
Since 2008, NASAA said, 34% of enforcement actions taken by state securities regulators have involved senior victims among states that track victims by age.
Of the 10,526 enforcement actions initiated between 2008 and 2013 by those states, 3,548 involved victims 62 and older.
Andrea Seidt, NASAA president and Ohio securities commissioner, said in a statement that the above statistic is “conservative, as it does not include cases from states that do not report the age of victims and many senior victims simply do not come forward.”
“Protecting senior investors from financial exploitation long has been a primary focus of state and provincial securities regulators,” Seidt said. “Regrettably, senior investor fraud and abuse is an ever-growing problem due to the amount of wealth seniors have accumulated throughout their careers and the steadily rising numbers of retirees.”
NASAA and its members, Seidt continued, “have been in the forefront in detecting the problem of senior investor abuse and responding to it aggressively with innovative regulatory solutions, targeted enforcement, investor education and publication of best practices for serving senior investors.”
Egan added in the statement that NASAA is “exploring this vital area from a variety of disciplines given the scope of the issues involved.”
The committee, she said, “will examine concerns raised by broker-dealer and investment advisor firms, as well as senior advocacy groups, and will recommend appropriate regulatory and industry responses to ensure proper compliance and supervisory procedures are in place to prevent the financial exploitation of seniors.”
Seidt said NASAA will appoint an Advisory Council of experts from government, business, senior advocacy organizations, academia and medical and legal practitioners, to inform the committee’s work as it moves forward.
Check out FINRA Move on Brokers' Expungement a Good First Step on ThinkAdvisor.