The Washington, D.C.-based Financial Industry Regulatory Authority (FINRA) announced on Thursday proposed rules that would require brokerage firms to take steps to help prevent the exploitation of seniors and other vulnerable clients.
FINRA has issued a regulatory notice seeking comment on proposed rules designed to combat the financial exploitation of vulnerable investors, particularly senior clients.
The self-regulatory organization is proposing amendments that would require firms to “make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account.” It is also proposing a new rule that would allow firms to place a temporary hold on a disbursement of funds or securities where they suspect financial exploitation, and to notify the trusted contact.
“This is intended to provide firms with appropriate tools to use when they have reasonable belief that financial exploitation is taking place. This will enable firms to better protect their senior and other vulnerable customers,” says Susan Axelrod, FINRA executive vice president, regulatory operations, in a statement.
The proposals are out for comment until Nov. 30.
FINRA plans on amending a model brokerage account form that it provides to firms that are designing or updating their new account forms, the regulator says in a statement, so that the model form captures trusted contact information.
See also: Model law may help advisors prevent financial exploitation of seniors