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FINRA adopts rule amendments to help protect older investors from financial exploitation

On Behalf of | Mar 4, 2022 | Financial Advisor Misconduct

Rule amendments recently adopted by the Financial Industry Regulatory Authority will give member firms additional tools to protect senior citizens from financial abuse, according to ThinkAdvisor.

FINRA issued Regulatory Notice 22-05 to explain that it had adopted two amendments to Rule 2165, the first uniform national standard for placing temporary holds to address suspected financial exploitation of older adults.

One amendment would permit member firms to place a hold on a securities transaction (in addition to the already-permitted hold on a disbursement of funds or securities) where there is a reasonable belief of financial exploitation.

The other newly adopted amendment would extend a temporary hold on a disbursement or transaction for an additional 30 business days, beyond the current maximum of 25 business days, if the member firm has reported the matter to a state regulator or agency, or a court of competent jurisdiction.

The amendments to Rule 2165 will become effective March 17.

FINRA said Rule 2165, implemented in 2018, has allowed member firms to address threats of potential fraud before customers can suffer financial harm.

The authority said temporary holds under the rule have protected older investors from a number of schemes, including a Central Intelligence Agency lawsuit scam, a lottery scam, a romance scam, and financial exploitation by a brother-in-law.

Along with FINRA’s measures, there has also been a recent push in Congress to prevent financial exploitation of seniors under the Empowering States to Protect Seniors from Bad Actors Act.

The attorneys at Lewitas Hyman advocate for investors who suffered losses due to various forms of improper account management, including financial abuse of seniors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact us at (888-655-6002 or through our online contact form for a no-cost evaluation of your matter.