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February 01, 2016 at 09:39 AM
The North American Securities Administrators Association said Monday that its membership has voted to adopt a model act designed to protect vulnerable adults from financial exploitation, including allowing broker-dealers or advisors to impose an initial delay of disbursements from an account of an eligible adult for up to 15 business days if financial exploitation is suspected.
The model, entitled “An Act to Protect Vulnerable Adults from Financial Exploitation,” provides new tools to help detect and prevent financial exploitation of vulnerable adults.
“The NASAA model act will help securities regulators, investment advisors and broker-dealers, as well as Adult Protective Services agencies work in partnership to protect our most vulnerable investors,” said Judith Shaw, NASAA president and Maine securities administrator, in a statement. “I am pleased that the NASAA membership adopted this model act, which now is available for individual jurisdictions throughout the United States to enact as legislation or implement through regulation.”
The Financial Industry Regulatory Authority issued a similar proposed rule for public comment last October, which would also give BDs the power 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.
SEC Investor Advocate Rick Fleming said he’d be watching the progress of NASAA and FINRA’s rules, and said that he’d be recommending the agency issue a similar rule. He told Congress any elder fraud rule or law “must balance two potentially conflicting goals: to respect every individual’s right to self-determination, and also to prevent his or her unwitting financial self-destruction.”
The NASAA model act also mandates reporting to the state securities regulator and state adult protective services agency when a qualified individual such as a securities broker or advisor has a reasonable belief that financial exploitation of an eligible adult has been attempted or has occurred.
