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Berge & Berge, LLP Blog

Wednesday, December 28, 2016

Finra proposes rule to prevent elder financial abuse

What could this new rule mean for our elderly loved ones?

Financial elder abuse is far more common than we can really know and can lead to devastating consequences. Because our elderly population can often become targets of unscrupulous individuals, we need to be as vigilant as possible to proactively protect our elderly loved ones.

The Financial Industry Regulatory Authority, Inc. (“FINRA”) is trying to do its’ part to help protect our senior citizens and younger adults with cognitive or physical disabilities from financial abuse. FINRA has proposed a new rule with the Securities and Exchange Commission (“SEC”) that allows financial brokers to report suspected financial abuse of the elderly and other vulnerable individuals.

The rule would also allow brokers to assign a “trusted contact” that they could call if they suspect that their client is being financially exploited. It would also provide brokers with the authority to freeze accounts of these elderly and vulnerable populations if they suspect abuse.

The rule was first proposed when FINRA launched the Securities Helpline for Seniors in April 2015 and received over 6,700 calls.

There is clearly a need to protect seniors from financial abuse, but not everyone is convinced that the FINRA rule is the way to go. Opponents of the rule are concerned that it places an undue burden on brokers to essentially become experts in psychology to determine who is at risk and whether they are being exploited. Concerns are also raised about having brokers thrown into the midst of family drama that may in fact put the “trusted contact” role into question.

While FINRA is working through the approval process with the SEC, other states have approved a model rule that was developed by the North American Securities Administrators Association (“NASAA”). Opponents of the FINRA proposed rule favor the NASAA rule because it requires that financial advisors contact Adult Protective Services and other state regulators if financial abuse is suspected. Not only does the NASAA legally protect brokers who withhold funds in suspected abuse cases, it takes the pressure off of them to determine who a true  “trusted contact” is and keeps them out of family drama.

Protect Your Elderly Loved Ones From Financial Abuse

If you are concerned about your elderly loved one’s financial situation, consider talking to a financial elder abuse attorney. The Law Offices of Berge & Berge can offer quality advice based on over 23 years of experience. Contact us today at 408-389-6980 to see how we can help.


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