SIFMA Comments on FINRA’s Senior Investor Protections Proposal

Release Date: December 2, 2015
Contact:  Carol Danko, 202-962-7390, [email protected]  

SIFMA Comments on FINRA’s Senior Investor Protections Proposal   

Washington, DC, December 2, 2015 – Today,SIFMA submitted a comment letter to the Financial Industry Regulatory Authority (FINRA) in response to its proposal (Regulatory Notice 15-37) on the financial exploitation of seniors and other vulnerable adults. 

“We commend FINRA for its commitment to helping the securities industry protect its senior clients,” said SIFMA president and CEO Kenneth E. Bentsen, Jr. “Senior investors can be some of the most vulnerable investors, falling victim to exploitation and scams. SIFMA’s members have been innovative and proactive in developing their own practices to identify potential problems and quickly combat any threats under existing law; however, more can be done at the regulatory level.  We look forward to working with FINRA on this important initiative to create stronger regulations to protect seniors and other vulnerable investors.” 

Senior financial exploitation is a problem that costs senior investors an estimated $2.9 billion annually – funds that many were relying on to support them in retirement.  With 10,000 Americans turning 65 every day and an estimated 1 in 5 Americans aged 65 or older being victimized by financial fraud, this problem will continue to grow.  A reported 55% of financial abuse in the United States is committed by family members, caregivers and friends; yet only an estimated 1 in 44 cases of financial elder abuse is reported. 

Reporting Process:

SIFMA urges FINRA to include language recognizing FINRA member firm’s ability to voluntarily report suspected cases of financial exploitation to state securities regulators, Adult Protective Services (APS) organizations, or other law enforcement officers in cases of suspected financial exploitation. SIFMA also requests that FINRA consider recognizing a firm’s ability to contact other financial institutions which are receiving counter-parties of an account transfer when fraud or exploitation is suspected.  

SIFMA supports FINRA’s proposal to permit firms to contact third parties in cases of suspected financial exploitation. However, SIFMA believes the reporting process for trusted contacts and immediate family members should be voluntary – not mandated – and be separate from the process of placing a hold. FINRA’s proposal requires firms to notify a trusted contact within two business days of a hold being placed on an account.  SIFMA believes that this may deter investors from providing trusted contact information.  


SIFMA supports FINRA’s base hold timeframe of 15 business days with a built-in 15 day extension, but believes that it should provide flexibility allowing for an extension in accordance with other existing laws or customer agreements.   

SIFMA believes that the two day timeframe to contact “all parties authorized to transact business on an account” is too short and vaguely defined.  As such, SIFMA suggests a notification provision such as the one found in Washington State law, which requires firms to make “reasonable efforts” to notify the necessary parties, without placing a specific time limit.  

Safe Harbor Provisions:

The proposal provides a “safe harbor when they exercise discretion in placing temporary holds on disbursements of funds or securities” for FINRA member firms.  SIFMA commends FINRA for including this provision in the proposed rules and requests FINRA provide clarity with examples of specific rules from which members would receive safe harbor and ensures that the safe harbor applies to any actions taken under a final rule.  

Trusted Contacts:

SIFMA commends FINRA’s recognition of the important benefits provided by one of the industry’s newest investor protection innovations – the trusted contact.  However, the FINRA proposal outlines a fairly rigid information collection process and appears to limit the industry’s ability to utilize a trusted contact in their investor protection efforts.  SIFMA urges FINRA to maintain flexibility in any final trusted contact policy and place no unnecessary restrictions on a firm’s ability to contact a client-identified individual. 

The full text of the letter can be found here: