A prior article addressed the growing concern over elder financial abuse. The Financial Industry Regulatory Authority (FINRA) reports that last year alone they received over 12,000 calls and recovered more than $5.3M in senior’s funds that were fraudulently obtained.
To help address this problem, FINRA issued two new rules that went into effect February 2018 and are designed to help investment brokers and advisors better protect seniors’ accounts from financial exploitation. Both rules affect either new account openings or changes to current accounts.
The first rule requires that the investor provide the name of a trusted contact person. This is someone the broker/advisor can contact if there are questions about the account, particularly if the broker suspects financial exploitation. The broker also needs the customer’s current contact information and health status. They also need to learn about any legal guardian, trustee or agent under a power of attorney.
The second rule allows a broker to place a temporary hold on disbursements from an account if those disbursements seem suspicious. This rule applies to accounts belonging to investors age 65 and older or investors with mental or physical impairments that the broker reasonably believes make it difficult for the investor to protect his or her own financial interests. Before disbursing the funds, the brokerage firm will be able to investigate the disbursement by reaching out to the investor, the trusted contact, or law enforcement.
These new rules illustrate a balance of privacy issues with concern over suspicious activity. Under previous FINRA rules brokerage firms risked liability for halting suspicious transactions.
If you suspect elder abuse of any kind, whether financial or otherwise, please contact Wyatt & Mirabella immediately for a list of action steps and/or resources to protect the suspected victim.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.