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New FINRA Rules Protect The Elderly

November 13, 2018
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Unfortunately it seems The Buffalo News reports cases of financial exploitation of the elderly on a weekly basis.

In February the Financial Industry Regulatory Authority (FINRA) implemented Rules 4512 and 2165.

Rule 4512 requires registered representatives (such as a brokerage firm) to make reasonable efforts to find a client’s trusted contact person (TCP) when a new account is opened or account information is updated.

Among other things, Rule 4512 allows the brokers to contact the TCP to discuss issues regarding the client’s account, to address potential financial exploitation, confirm the account holder’s health status and identify the account holder’s power of attorney and executor. 

Rule 2165 authorizes a member firm to place a temporary hold on a client’s funds if there is a reasonable belief financial exploitation has occurred, is occurring, has been or will be attempted.

The goal of the rules is to provide a layer of protection if there is a belief financial exploitation is occurring.

All new rules have pluses and minuses.  On the one hand having a TCP could stop problem transactions before they occur.  On the other hand a TCP may receive information that was intended to remain private.

It is important to know how Rules 2165 and 4512 affect your individual situation.

You may want to contact your financial representatives to see their policies regarding these new rules.  You may be able to identify your trusted contact person which can be updated over time, if needed.

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