New FINRA Rules to Prevent Exploitation of Seniors

In response to the growing number of aging investors approaching retirement or already in retirement, new rules adopted by the U.S. Securities and Exchange Commission require broker/dealers to place a temporary hold on disbursements of funds or securities from their clients’ accounts if they suspect financial exploitation.

In addition to adopting Financial Industry Regulatory Authority Rule 2165 (Financial Exploitation of Specified Adults), the SEC also approved amendments to FINRA Rule 4512 (Customer Account Information) by requiring broker/dealers to make reasonable efforts to obtain the name of, and contact information for, a “trusted contact person” for a customer’s account.

Both rules became effective on Feb. 5, 2018, according to an article in, titled New FINRA Rules to Prevent Exploitation of Seniors.

High profile incidents and advocacy by senior groups, have made senior financial exploitation a top priority for the SEC and FINRA. “In light of the new rules, speak to your clients about making a loved one the Trusted Contact Person. This way, if something out of the ordinary occurs on the account, your client will be aware and can take action to protect assets,” advised the article’s authors.