FINRA Issues FAQs on Rules Relating to Financial Exploitation of Seniors and Other Vulnerable Adults

January 31, 2018

The Financial Industry Regulatory Authority (FINRA) has published frequently asked questions (FAQs) for complying with new FINRA Rule 2165 (Financial Exploitation of Specified Adults) and amendments to FINRA Rule 4512 (Customer Account Information) (collectively, New Rules). The New Rules become effective on February 5, 2018.

The New Rules were developed to provide FINRA member firms (Firms) with a mechanism for quickly responding to situations where a broker-dealer has a reasonable basis to believe that financial exploitation of vulnerable adults has occurred or will be attempted. Rule 2165 allows Firms to “place a temporary hold on a disbursement of funds or securities from the Account of a Specified Adult” if the firm has a reasonable belief regarding financial exploitation of a customer, while Rule 4512 requires Firms to make reasonable efforts to implement a “trusted contact” system into their customer accounts.

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