According to yesterday’s InvestmentNews article entitled “Elder abuse prevention by advisers depends on their firms’ response to new rule,” the Securities and Exchange Commission (SEC) approved a rule by the Financial Industry Regulatory Authority (FINRA) designed to protect seniors and the elderly. Under the new rule, firms must make a reasonable attempt to collect information for a trusted third-party contact for investors and allows brokers to halt disbursements from accounts of clients they think are being taken advantage of. The order by the SEC stated: “These measures will assist members in thwarting financial exploitation of seniors and other vulnerable adults before potentially ruinous losses occur.” The rule is to take effect in February 2018. The rule leaves it up to the brokerage firm to take the necessary steps in order to prevent elder abuse, but does not actually require the firms to do anything. Under the rule, brokers may put a hold on accounts of potential abuse victims but does not include penalties for those who fail to do so. Meanwhile, many states are expected to approve rules that would require advisers to report suspected senior abuse to authorities. Many are likely to be based upon a model rule by the North American Securities Administrators Association (NASAA).
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