The Financial Industry Regulatory Authority said it is conducting a review of recently adopted rules partly designed to help protect senior investors from financial exploitation.
The rules, adopted last year, are designed to protect investors, with particular emphasis on protecting vulnerable investors like seniors, many of whom are living on fixed incomes and budgets without the ability to offset significant losses over time or through other means.
One rule provides immunity for B-Ds who report abuse or stop disbursements when they suspect wrongdoing; the other requires broker-dealers to ask clients if they want to supply the name of a trusted person who can be contacted when circumstances warrant it.
Finra said it will assess the effectiveness and efficiency of the rules and administrative processes and consider whether additional tools, guidance or changes are appropriate.
Finra said recent evidence suggests that financial exploitation of seniors has been increasing, in terms of both magnitude and impact.
It added that while studies indicate that financial exploitation of seniors is often perpetrated by strangers, family members and caregivers—rather than by broker-dealers or other financial services organizations—B-Ds and other financial services organizations have an important role to play in protecting senior investors.
The assessment of the rules will include an evaluation of the efficacy and efficiency of current rules implemented, including Finra’s internal administrative processes; input from both external and internal stakeholders, including advisory committees and other experts inside and outside of the organization; and input from industry officials, member firms, investors and investor advocates.
Following the assessment, possible steps may include rule modifications, technology improvements, additional tools or other resources, or additional research or information gathering, Finra said.