FINRA’s New Proposal to Stop Elder Fraud Abuse

The Financial Industry Regulatory Authority (FINRA) released a new proposal aimed at protecting seniors from financial fraud. In order to curb elder fraud, FINRA would allow financial institutions to place a hold on the dispersal of funds from elderly clients’ accounts for up to 15 business days if the brokerage firm believes that fraud is involved. The freezing of disbursement from an account could be extended for an additional 15 business days under certain circumstances. We view this as a substantial step toward stopping elder investment fraud.

According to FINRA, the rules have been proposed to provide an action plan for financial firms that are in need of guidance when it comes to elder fraud. This rule would give brokerage firms a safe harbor if they are sued for failing to disburse funds from an account. Several states have been slow to enact protective legislation aimed at preventing financial elder abuse – currently only three states have rules allowing financial institutions to place temporary holds on transactions if exploitation is suspected.

The proposed rules, which would apply to investors over the age of 65, or those over 18 years of age but believed to have an impairment that renders the individual unable to protect their own interests, would require the account holder to have a “trusted contact” who can verify account transactions. If the company believes the trusted contact is the one perpetrating the fraud, the company may reach out to a family member or another immediate person on file.

Contact Us Today

The attorneys at Dimond Kaplan & Rothstein, P.A. have helped recover more than $100 million from some of the largest banks and brokerage firms in the world, and they have represented numerous elderly investors who were victims of investment fraud. If you or someone you know has been the victim of elder fraud, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today with an elder fraud lawyer.

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