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Preventing Elder Financial Abuse | New FINRA Rules

FINRA Rules Elder Financial Abuse.jpgFamilies want enforceable rules to protect elders from elder financial abuse and financial exploitation. For the most part, such rules have not yet caught up with the reality of the frequency of such abuse. FINRA, the Financial Industry Regulatory Authority, is taking some significant steps to institute controls to help identify potential financial abuse of senior investors or individuals with diminished mental capacity.

Financial exploitation defined in the new FINRA rule is "(A) the wrongful or unauthorized taking, withholding, appropriation, or use of a Specified Adult's funds or securities; or (B) any act or omission by a person, including through the use of a power of attorney, guardianship, or any other authority regarding a Specified Adult, to: (i) obtain control, through deception, intimidation or undue influence, over the Specified Adult's money, assets or property; or (ii) convert the Specified Adult's money, assets or property."

This FINRA Rule 2165 is effective February 5, 2018, and it also requires securities firms to make reasonable efforts to obtain the name and contact information for a trusted contact person. The Rule also permits securities firms to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation.

Does this rule solve all the problems associated with elder financial abuse? Not at all, but it is a good acknowledgment of the problems. The Regulatory Notice includes notes referencing an analysis "which found that U.S. adults age 65 and older are more likely to be targeted for financial fraud, including investment scams, and more likely to lose money once targeted."[1] The notes also reference an elder financial abuse report "discussing the increasing prevalence of elder financial abuse and noting the many forms of vulnerability that "make elders more susceptible to [financial] abuse," including, among others, poor physical or mental health, lack of mobility, and isolation."[2]

We have a long way to go to providing further protections for elders. That said, recent federal, state and regulatory efforts provide hope that elder financial abuse will become a major policy concern in our society.

Hackard Law represents aggrieved elders and their families in trust, estate and elder financial abuse litigation matters in California's major urban counties, including Los Angeles, Santa Clara, Alameda, San Francisco, and Sacramento. If you wish to speak with us about your matter call us at 916 313-3030. We're happy to hear your story.

Preventing Elder Financial Abuse | New FINRA Rules from Hackard Law on Vimeo.


[1] FINRA Investor Education Foundation, Financial Fraud and Fraud Susceptibility in the United States: Research Report from a 2012 National Survey (2013)

[2] MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America's Elders (June 2011)

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