Call Now For a Free Consultation:
(614) 532-4576
Nationwide Representation

New FINRA Rule 2165 Requires Reporting of Suspected Exploitation

FINRA’s new senior exploitation rule (Rule 2165), Financial Exploitation of Specified Adults, was approved by the Securities and Exchange Commission (SEC) in February of 2017. The new rule may help to protect senior investors from financial exploitation, a growing problem within the financial and securities industries.

FINRA rule changes permit member firms to respond faster to situations where they suspect or have knowledge of senior financial exploitation. When concerns arise, they will be allowed to (1) notify a designated contact person on an account about potential financial exploitation and (2) place disbursements of securities or funds from customer’s accounts on a temporary hold.

Trusted Contact Person

The previous FINRA rule (Rule 4512) required member firms to obtain and maintain information on all customer accounts, but did not require contact information of a trusted contact person on each account. The new FINRA rule (Rule 2165) requires firms to get these details for the contact person who is age 18 or older on every person's account. A trusted contact person may be contacted by a financial or brokerage firm or a broker-dealer if questions, concerns or problems arise with the account.

Temporary Hold on Disbursements

If financial exploitation is suspected, the new FINRA rule allows temporary holds on the disbursement of securities or funds under certain conditions:

  • Accounts of senior adults age 65 and older
  • Accounts of persons age 18 and older with validated physical or mental impairments
  • Reasonable suspicion or knowledge that financial exploitation has occurred

Oral or written notification of a temporary hold on disbursement of securities or funds must be given to all parties authorized on an account, including the trusted contact person listed. Members must also immediately conduct an internal review of the temporary hold. Unless time is extended under Rule 2165, a temporary hold must be released within 15 business days after the date the hold was placed.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Atlanta Office

945 East Paces Ferry Road, Suite 2275
Atlanta, GA 30326
Columbus Office

305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram