In a related action, Finra last month asked for comment on a proposed new rule that would permit supervisors and compliance people to put temporary 15-day holds on disbursements from accounts owned by people age 65 and older (or otherwise impaired) when financial exploitation is suspected.
Comments on the Finra proposal, Regulatory Notice 15-37, are due November 30.
The Finra plan would allow “enough time to do an investigation, get into court, and really protect” the investor, said Wendy Cappelletto, supervising attorney in the office of the public guardian for Cook County, Ill.
On the Congressional front, senators Susan Collins (R-Maine) and Claire McCaskill (D-Mo.), introduced a bill in October that would provide immunity from federal privacy violations for financial institutions and advisors who report suspected abuse to regulators or adult protective services agencies.
Disagreements Emerge On Details
Although the industry and regulators agree on the need to protect the swelling number of vulnerable seniors, they disagree on some of the details in the proposals.
Under the state model law, for example, a firm or advisor would be required to notify state regulators and adult protective services departments of any suspected abuse.
“Getting that into the hands of someone who can do something about it is important,” NASAA's Shaw said.
The Securities Industry and Financial Markets Association (SIFMA), which has been working with a number of states individually in combating financial exploitation, does not like the idea of mandatory reporting. Neither does the Financial Services Institute.
In many states, adult protective services agencies don’t have the resources to handle the thousands of reports that would be generated with mandated reporting, SIFMA said in a comment letter to NASAA. The trade group estimated that up to half of all suspected cases turn out to be false positives.