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Having a Senior Moment

In connection with the 2022 SIFMA C&L Seminar, the Best Interest Compliance Team submitted a white paper entitled “Having a Senior Moment: Recent Legislation and Rules to Protect Seniors from Financial Exploitation,” that was made available to conference attendees on a mobile app.

As its title suggests, our paper covers recent laws and regulations passed to protect senior investors. We specifically cover: (1) the Senior Safe Act, a law passed to provide immunity to financial institutions/advisors who disclose financial exploitations; (2) FINRA Rule 2165, which allows FINRA members to place temporary holds on the disbursement of funds or securities; (3) an SEC No Action Letter relating to FINRA Rule 2165; (4) FINRA Rule 4512, which requires member firms to make reasonable efforts to obtain a trusted contact person on customers’ accounts; (5) FINRA Rule 3241 which attempts to minimize conflicts where a registered person is named as a beneficiary or executor to their customer’s estate; and (6) “Report and Hold Statutes” that have been passed in a number of states and that require/encourage broker-dealers to report any suspicions of financial abuse. As part of our white paper, we also prepared a 50-state survey of the states that have passed Report and Hold Statutes.

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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.

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Further Protection for Good Samaritan Brokers: States and FINRA Continue the Push to Protect Senior Investors by Protecting Brokers Who Do the Right Thing

Following the passage of last year’s federal Senior Safe Act, several states moved to beef up protections for senior investors by permitting brokers to act without liability.
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Make Senior Investing Safe Again? President Trump Signs Into Law the Senior Safe Act in an Attempt to Curb Financial Abuse of Seniors

On May 24, 2018, President Trump signed into law the Senior Safe Act,  which is aimed at curbing elder financial abuse. The Senior Safe Act is the latest effort to protect senior investors, as both FINRA and the SEC included protecting senior investors among their 2018 priorities. This blog has previously covered, at length, the SEC and FINRA 2018 exam priorities. Elder protection was also one of the SEC’s 2017 priorities and has been a FINRA priority since 2016.

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