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New Broker Rules to Help Fight Elder Financial Abuse

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In the fight against elder financial abuse, regulators, caretakers and financial and legal professionals all need to partner for positive change. Elder financial abuse, the exploitation of our senior citizens, is already a serious threat to our local communities and national economy. Every year this crime results in nationwide losses of anywhere from $3 billion to $36 billion, tremendous damage reflected in local tragedies - the grandmother whose accounts were depleted by an unethical broker, the elderly man suffering dementia who was manipulated into changing his will by an unscrupulous relative, the countless victims of any number of scams.

Elder financial abuse isn't some theoretical possibility; it's a criminal act and a genuine tragedy we can witness in everyday American life. It is welcoming news, therefore, that more financial and investment professionals are becoming aware of the problem and taking concrete steps to combat it. This past week the North American Securities Administrators Association (NASAA) adopted new guidelines to help both regulators and advisors protect what it terms "vulnerable adults" (primarily the elderly) and prevent financial exploitation. NASAA president Judith Shaw remarked that the act "will help securities regulators, investment advisors and broker-dealers, as well as Adult Protective Services agencies work in partnership to protect our most vulnerable investors."

NASAA's model act allows brokers and advisors to delay disbursement of funds for up to 15 days if they suspect wrongdoing afoot with a client account, plus an additional 10 days on request of regulators or adult protective services. If the financial professional does have reasonable suspicion of elder financial abuse or exploitation, they are mandated to report the case to state authorities - both the securities regulator and representatives of adult protective services. In addition, third parties initially designated by the client can be notified, as long as they're not a suspect in the abuse. To encourage responsible reporting, brokers and advisors are now given immunity from civil or administrative liability if they do take action to prevent potential exploitation.

In October of last year the Financial Industry Regulatory Authority (FINRA) rolled out similar guidelines for broker-dealers in the effort to prevent elder financial abuse, a sign that awareness of the challenge it poses is growing. To stop financial exploitation of the elderly, teamwork and vigilance will go a long way in reducing the scale of this epidemic. But that means involvement by all of us - family members, financial professionals, attorneys, and medical personnel. If we can successfully block abusers from harming their intended victims at the local level, we'll know we're contributing to the financial safety of our family and community at large.

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