FINRA Releases FAQ on Senior Exploitation Rules

The Financial Industry Regulatory Authority (FINRA) has published a set of frequently asked questions on its rules concerning financial exploitation of seniors that go into effect on Feb. 5, reports Think Advisor . FINRA Rule 2165 allows members to impose provisional holds on disbursements of funds or securities from the accounts of specified customers "where there is a reasonable belief of financial exploitation of these customers." Revisions to FINRA Rule 4512 stipulate that members make reasonable efforts to secure the name of and contact information for a trusted contact person for a customer's account. According to the Q&A, a member firm may not place a temporary hold on a securities transaction pursuant to Rule 2165, as the rule is inapplicable to transactions in securities. However, Rule 2165 says a firm with a reasonable belief of financial exploitation of a client may place a temporary hold on a disbursement from one account to another at the firm. FINRA notes in such a situation, "a member may place a temporary hold on a request to disburse funds or securities from an account to another account at the member (e.g., where a member receives a request to move funds from a customer's account to his friend's account at the member but the member reasonably believes that the customer is being financially exploited)." The FAQ also explains when a firm may disclose to the trusted contact information about a customer's account.