"Safe Harbor" Rule Aims to Protect Senior Investors

FINRA Extends Effort to Protect Elder Investors

The securities industry watchdog, FINRA, has announced new rules which it hopes will help protect senior investors against financial exploitation. In light of recent alarming reports that elderly and retired investors in this country were losing many millions of dollars to a variety of scams seeking to relieve them of their hard-earned retirement savings, the Financial Industry Regulatory Authority (along with the Securities & Exchange Commission and the North American Securities Administrators Association) have put together a concerted effort to offer broker-dealers and financial advisors tools to stop scams. They have also extended investor education programs to raise awareness among our most vulnerable - and wealthy - population segment: older investors.

“Safe Harbor” Rule Puts the Chill on Suspicious Transactions

The first new rule circulated by FINRA this week has been called the “safe harbor” rule. This rule gives financial advisors the ability to “pause” for up to 15 days dubious disbursements executed in the accounts of elderly investors or investors of diminished capacity. While the transactions are paused, advisors and supervisory personnel can further investigate the disbursements and reach out to the investor’s “trusted contact” for more information. A “senior investor” in the construction of this rule is someone who is over the age of 65 or who has evidence some other vulnerability which makes them more susceptible to fraud and deceit.

Financial Advisors and Elder Financial Abuse

FINRA, the SEC, and the NASAA have repeatedly singled out financial advisors and investment managers as among the most important people involved in any attempt to defend the elderly against financial predation. Since they have regular contact with senior investors, they know best what is customary in their accounts - and what is suspicious. These agencies will continue to provide brokers with weapons to defend their clients against attacks from criminals, fraudsters, and opportunistic family members.

Unfortunately, while financial advisors can be critical in protecting senior investors from fraud, they can also be guilty of exploiting them. Indeed, one need only review FINRA’s disciplinary action reports to discover that broker-dealers and financial advisors routinely offer misguided advice to unsuspecting older investors in order to enrich themselves. More innocently - but also in violation of federal securities laws - these advisor often recommend products that are unsuitable for their clients. Either way, such offences may be subject to legal action.

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If you or someone you know has suffered financial injury as a result financial exploitation, broker misconduct, or investment fraud, please contact our team of experienced securities attorneys immediately for a free consultation at 1-855-462-3330 (toll-free) or by using our online contact form.