States Enact Good Samaritan Broker Laws

On January 22, 2016, the members of the North American Securities Administrators Association (NASAA) released the Senior Model Act.  It was developed and approved to serve as a model statute for states to adopt to target financial exploitation of seniors and to shield from liability brokers and brokerage firms who acted to assist those seniors. The Senior Model Act comports with a multitude of legislation and regulatory protection for seniors. Broadly stated, the Senior Model Act proposes language for legislation that would require “qualified individuals” such as broker-dealers and investment advisers, and those who work in a supervisory or legal capacity for them, to report any suspicions of financial elder abuse. The Senior Model Act proposes the protection of “eligible adults,” defined as those over the age of 65.

Key Provisions of the Senior Model Act:

  • Mandatory Reporting. Qualified individuals who reasonably believe a senior has been or is targeted to be financially exploited must report this promptly to their state’s security regulator and state’s adult protective services.
  • Notification to Third Parties. A qualified individual may only report this to a third party if the senior has designated one. A qualified individual cannot report it to a person who is suspected of committing the financial abuse.
  • Delayed Disbursements. Broker-dealers and investment advisers can delay disbursements from the senior’s account for up to 15 days. To do so, they must (a) notify people authorized to transact business on the senior’s account, (b) notify the state securities regulator and adult protective services, and (c) undertake an internal review of the suspected exploitation. The disbursements may be further delayed by the qualified individual for an additional 10 business days or by court order.
  • Immunity. Qualified individuals will have immunity from civil or administrative liability for actions taken pursuant to the Senior Model Act.
  • Providing Records. Broker-dealers and investment advisers would be required to comply with record requests from adult protective services or law enforcement when financial exploitation is suspected.

Twenty-eight states have passed laws that are substantially similar or identical to the Senior Model Act passed by the North American Securities Administrators Association. Click here for a state survey:

  • The effective date of the law in each state
  • Which key provisions the state has adopted
  • Any notable deviations or notes of interest.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About the Author: Sandra D. Grannum

Sandra Dawn Grannum concentrates her practice on securities, broker/dealer arbitration, litigation, mediation and regulatory defense. She is co-chair of the Commercial Litigation Team.

Sandy has tried complex multimillion-dollar arbitrations before FINRA, AAA and JAMS across the country. She has represented brokerage firms, banks, clearing firms, and associated persons in over 60 arbitrations before the NASD and FINRA which have been tried through award. In addition, she has successfully pursued cases in state and federal courts and in adversarial proceedings before bankruptcy courts.

About the Author: Edward J. Scarillo

About the Author: Nicole C. Wixted

Nicole Wixted is regarded for her steadfast representation and counseling of insurance and financial services industry clients on a wide array of issues. An experienced commercial litigator, Nicole represents clients in disputes in state and federal courts nationwide, with significant experience in civil and appellate litigation.

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