FINRA EXAMS TO INCLUDE COMPLIANCE WITH ELDER ABUSE RULES

FINRA EXAMS TO INCLUDE COMPLIANCE WITH ELDER ABUSE RULES

The Financial Industry Regulatory Authority (“FINRA”), the self-regulatory organization which enforces rules governing the activities of all registered stockbrokers and broker-dealer firms, has announced that it will look “more closely” at brokers’ compliance with new elderly abuse rules as part of its broker examination process.

FINRA Rule 2165, entitled “Financial Exploitation of Specified Adults,” went into effect in February 2018. The rule permits brokers/firms to place a hold on a disbursement of funds from an account if the firm reasonably believes that there has been, is, or could be, financial exploitation of a person age 65 and older or an adult with a mental or physical impairment which renders the individual incapable of protecting his or her own interests.

FINRA previously has reminded its members of their obligations towards senior investors in FINRA’s Notice to Members Regulatory Notice 07-43. In this Notice, FINRA highlighted the suitability requirements which may be of particular to senior investors, such as investment time horizons, liquidity needs, tax status, and lower risk tolerance.

FINRA likewise warned about the use of false, exaggerated, unwarranted, or misleading statements or claims in communications with the public. Specifically, FINRA warned about the increased use of possibly misleading designations such as “certified senior adviser,” “senior specialist,” “retirement specialist,” or “certified financial gerontologist,” cautioning that the criteria used by organizations which confer such designations vary greatly and may not require any advanced training, examination, or continuing professional education.

Another concern for senior investors is the “free lunch” seminar, which may be nothing more than an aggressive or misleading sales seminar using high-pressure tactics to promote investments which may not be suitable for everyone in attendance. FINRA warns that these seminars may include high-pressure tactics such as presenting “limited time offer” or “today only” terms, and/or by frightening the attendees with dire warnings about inflation or market risks, or preying on their concerns about becoming dependent on other family members.

If you or someone you know is a senior investor who has suffered financial harm due to unsuitable, misleading, or high-pressure investment sales tactics, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.