The Financial Industry Regulatory Authority (FINRA) has submitted new rule changes for the Securities Exchange Commission (SEC) to approve which is designed to help prevent elder financial fraud. The proposed rule changes will require brokerage firms to “make reasonable efforts” to obtain contact information for “trusted” individuals who are designated by elderly account holders. The “trusted” individuals, such as close friends and family members, would be contacted by brokerage firms in the event of suspicious activities related to an elderly person’s investment accounts. In a recent press release, FINRA proposed changes that would allow brokerage firms to place a temporary hold on suspicious disbursements and alert “trusted” contact persons about the hold on account recent activities. This change would allow elderly investors the benefit of inquiries from family members to investigate whether unscrupulous individuals may have defrauded them. Currently, there are no provisions that allow brokerage firms to contact non-account holders or to place a temporary hold on fund withdrawals which have been flagged for suspicious activities.
FINRA proposed plan changes include providing space for a “trusted” individual’s contact information on new account application templates, which brokerage firms can use on a voluntary basis. The proposed rule changes submitted to the SEC occurs roughly three months after Congress approved legislation that grants immunity to brokerage firms and financial advisors for reporting elder financial fraud.
KlaymanToskes represents elderly investors that are victims of financial fraud who suffer damages from violations of FINRA sales practice rules and regulations related to misappropriation of funds, misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice and brokerage firms’ failure to supervise its financial advisors. KlaymanToskes is dedicated to the protection of the rights of elderly investors and their families.
KlaymanToskes is a leading national securities law firm practices areas include securities arbitration and litigation, on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm represents high net-worth, ultra-high-net-worth, and institutional investors, such as non-profit organizations, unions, public and multi-employer pension funds. KlaymanToskes has office locations in California, Florida, New York and Puerto Rico.