Citing the "growing problem of fraud and financial exploitation," the Financial Industry Regulatory Authority is seeking comment on how to further modernize its rules.

Specifically, based on comments on Regulatory Notice 25-07, FINRA is proposing in Notice 26-02 to amend Rules 4512 (Customer Account Information), 2165 (Financial Exploitation of Specified Adults) and proposed Rule 2166 (Temporary Delays for Suspected Fraud).

"Americans over age 60 lost more than $4.8 billion to fraud in 2024," FINRA states. "This estimate represents not only devastating financial losses but also the profound personal toll fraud takes on victims, including embarrassment, isolation and diminished quality of life. Moreover, the actual magnitude of fraud losses is unknown due to underreporting."

For senior investors, "these losses can be particularly catastrophic," FINRA said. "The irreversible nature of these losses underscores why FINRA has placed special emphasis on protecting this vulnerable population and why member firms play such a crucial role as the first line of defense against exploitation."

FINRA is taking comments until March 9 on:

  • Trusted Contacts: FINRA is proposing to permit broker-dealers to use the alternative term “emergency contact” and to provide additional flexibility for a customer to name a trusted or emergency contact for use across all the customer’s accounts.
  • Temporary Holds: FINRA plans to extend the maximum temporary hold period under Rule 2165 from 55 business days to 145 business days, in three 30-business day increments, subject to safeguards.
  • New “Speed Bump” for Suspected Fraud: The change would allow a temporary delay of up to five business days on disbursements or transactions when there is a reasonable belief of fraud.

The threat of fraud "extends across all age demographics and is growing at an alarming pace," FINRA said.

The FBI reported a record-breaking $16.6 billion in losses in 2024, FINRA notes, representing a 33% increase in losses from 2023.

"Globally, consumers lost over $1 trillion to scams in 2024," FINRA said.

NOT FOR REPRINT

© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.