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September 17, 2015 at 10:47 AM
The Financial Industry Regulatory Authority’s Board on Thursday authorized FINRA to issue for public comment a new rule that would allow firms to place a temporary hold on disbursement of funds or securities from an elderly or mentally/physically handicapped customer’s account if there is a reasonable belief that the person is being financially exploited.
Richard Ketchum, FINRA’s chairman and CEO, said in a Thursday statement that “seniors are at risk, and FINRA is committed to helping protect seniors and other vulnerable adults from financial exploitation. This proposal is an important step forward that would benefit both investors and firms.”
The proposal would also require member firms to “make reasonable efforts” to obtain the name of and contact information for a trusted contact person for a customer’s account by amending Rule 4512 (Customer Account Information).
The temporary hold plan creates new FINRA Rule 2160 (Financial Exploitation of Eligible Adults), and applies to investors aged 65 or older as well as investors 18 and older who have a mental or physical impairment that renders them unable to protect their own interests.
