Connecticut Department of Banking Commends FINRA on the Enactment of its
New Rules Aimed to Protect Seniors from Financial Abuse
February 23, 2018
Banking Commissioner Jorge Perez commends FINRA on its new rules, enacted earlier this month, aimed to protect investors from financial exploitation. FINRA (Financial Industry Regulatory Authority), the self-regulatory organization which regulates brokerage firms, adopted these new rules to provide broker-dealers and their firms the necessary tools to help protect their clients from financial exploitation.
FINRA Rule 2165 (Financial Exploitation of Specified Adults) permits broker-dealers to place temporary holds on disbursements of funds or securities where there is a reasonable belief of financial exploitation. Once the hold has been placed, broker-dealers have two days to notify all those authorized to transact business as well as the trusted contact for the account. Next, the broker-dealer must initiate a review of facts and circumstances surrounding the case. Temporary holds expire within 15 days, unless an extension is granted by a state or federal regulator or a court of competent jurisdiction. Firms relying on this rule are required to draft written supervisory and training procedures and retain all records for regulatory review. For additional information, refer to the Frequently Asked Questions, available on the FINRA website.
In addition, FINRA also amended FINRA Rule 4512 (Customer Account Information) which now requires broker-dealers to make reasonable efforts to obtain the name and contact information for a trusted contact person for a customer’s account.
“The FINRA Rule compliments legislation the Department of Banking will present to the Connecticut legislature in the coming weeks,” said Banking Commissioner Jorge Perez. “In addition to broker-dealers, we hope to expand the provision to additional financial professionals, including investment advisers, as well as to financial institutions, such as banks and credit unions.”
Research continues to show that financial exploitation and abuse among our senior population is on the rise. In response, the Department of Banking has begun offering training to help financial professionals recognize and report possible elder financial exploitation. Appropriately named “Senior$afe,” the training program provides factors that contribute to the prevalence of senior financial abuse, and helps financial professionals identify the red flags of fraud, exploitation or abuse.
“Educating consumers and industry professionals alike is an important part of our mission at the Department of Banking,” said Commissioner Perez. “The Senior$afe training provided by the Department is an excellent way for professionals in the financial and investing industries to arm themselves with the tools necessary to help their most vulnerable customers, members and clients.”
For more information on Senior$afe training, or to schedule one for your firm or financial institution, visit www.ct.gov/dob/SeniorSafe or contact the Department’s outreach coordinator at 860.240.8176.