FINRA commenced a retrospective review of its rules and administrative
processes meant to help protect senior investors from financial exploitation and is now requesting comment on suggested changes to and
creation of rules and administrative processes addressing the issue.
FINRA is requesting feedback on proposed expansions to Rule
2165, which permits a member firm to place a temporary hold on disbursement of
funds or securities from the account of a “specified adult” customer. The proposed expansions to the Rule are holds
on securities transactions, holds on accounts of customers with diminished
capacity, and holds longer than 25 days.
FINRA is also considering developing a dedicated Rule 2165-related
problem code for use in meeting reporting requirements pursuant to Rule 4530
and issuing guidance on when complaints related to 2165 temporary holds should
be reported on Forms U4 and U5.
FINRA is also assessing the effectiveness of Rule 4512,
which requires members to obtain the name of and contact information for a
trusted contact person at the time of opening and updating a non-institutional
customer’s account, and considering amendment of Rule 3240, which provides a regulatory
framework to member firms for control over lending arrangements between
registered persons and their customers, to provide better coverage of loan arrangements
with senior customers.
Further suggestions are rulemaking to explicitly prohibit or
limit the ability of registered persons to be named as beneficiary, executor,
power of attorney, trustee, or similar positions of trust on the account of a
non-family member customer and the inclusion of the customer’s age or physical
or mental impairments in the “principal considerations” of FINRA’s Sanction
Guidelines.
