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FINRA to Protect Senior Investors With 2 New Rules

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Beginning next year, seniors and their investments will be protected by two new rules aimed at curbing financial abuse.

Starting in February 2018, firms will have to “make reasonable efforts” to get the name and associated information for a “trusted contact person for a customer’s account” and will be allowed to put temporary holds on the release of funds or securities “when there is reasonable belief of financial exploitation,” according to the Financial Industry Regulatory Authority.

“These rules will provide firms with tools to respond more quickly and effectively to protect seniors from financial exploitation,” said FINRA President and CEO Robert W. Cook, in a statement. “This project included input and support from both investor groups and industry representatives, and it demonstrates a shared commitment to an important, common goal – protecting senior investors.”

By getting a contact person for an investor, a firm could then have an additional resource for handling the senior’s accounts, protecting the account assets and responding to any possible financial exploitation.

The temporary hold could give firms “a safe harbor” from certain FINRA rules by letting them investigate issues and reach out to the client, trusted contact and, if needed, law enforcement or adult protective services, before releasing funds “when there is a reasonable belief of financial exploitation,” the regulator says.

This “is a critical measure because of the difficulty investors face in trying to recover funds that they have inadvertently sent to fraudsters and scam artists,” the regulatory group says.

FINRA launched the Securities Helpline for Seniors two years ago. Since then, the group has received over 8,600 calls and recovered more than $4.3 million in voluntary reimbursements from firms for clients.

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