On August 9, 2019, FINRA issued Regulatory Notice 19-27 requesting comments on its rules and administrative processes that most directly apply to financial exploitation of senior investors. Comments will be assessed in conjunction with FINRA's retroactive review of these rules and processes. Specific items of interest, among others, include:
- Rule 2165, which permits a broker-dealer to place a temporary hold on a disbursement of funds or securities from the account of a "specified adult" customer when the firm reasonably believes that financial exploitation of that adult has occurred, is occurring, has been attempted or will be attempted. FINRA is interested in whether the safe harbor should be extended to apply to transactions in securities, in addition to disbursements of funds and securities.
- Rule 3240 (Borrowing From or Lending to Customers), which provides a regulatory framework to give member firms greater control over, and supervisory responsibility for, lending arrangements between registered persons and their customers. Lending arrangements between registered persons and customers are an area of interest for FINRA because of the potential for misconduct.
- Rule 4512, which requires broker-dealers to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a customer's account or when updating account information. FINRA wants to gain a better understanding of the effectiveness of the trusted contact provision.
Originally published in REVERSEinquiries: Volume 2, Issue
8.
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