| NEW YORK, March 30
NEW YORK, March 30 The U.S. Financial Industry
Regulatory Authority announced a new rule on Thursday that
allows brokers to pause disbursements from client accounts if
they suspect a client is suffering from dementia or being
influenced by caregivers or scam artists.
The rule, which will go into effect in February 2018, will
also require brokerages to collect the name and phone number of
a "trusted contact person," which the brokerage will call if a
withdrawal raises such concerns.
The delay is meant to give the brokerage time to contact
trusted people and investigate the reasons for the disbursement
of funds or securities.
Protecting senior investors from financial exploitation has
been a top concern for FINRA in recent years, which launched a
hotline in 2015 for seniors who have questions or concerns about
their investment accounts.
The new rule, which applies to all of FINRA's 3,900 member
firms nationally, aims to resolve conflicts with some legacy
FINRA rules that created problems for brokers who wanted to
intervene on a client's behalf.
For example, industry rules require brokerages to get the
best possible prices for clients' securities, which they may not
be able to do if they pause a transaction that is later
determined to be legitimate. This rule provides protection
against that scenario.
Because FINRA is a self-regulatory organization solely for
the securities industry, and its actions do not have the force
of law, the new rule does not extend to state or federal courts
if a client or family member were to file a lawsuit.
However, a few states, including Missouri, have passed laws
with similar protections for brokers.
(Reporting By Elizabeth Dilts; Editing by Bill Rigby)