The primary purpose of Rule 2165 is to permit a Finra member firm to place a hold on the disbursement of funds or securities. If a temporary hold is elected, Rule 2165 requires the firm to immediately initiate an internal review of the facts and circumstances that caused the firm to believe that financial exploitation has occurred and is (or will be) attempted.
It is important to note that Rule 2165 does not apply to transactions in securities. For example, the rule would not apply to a customer’s order to sell his or her shares of a stock. However, if a customer who is a specified adult requests that the proceeds of a sale be disbursed out of the account, then the rule would apply to the disbursement of the proceeds.
The National Center on Elder Abuse forecasts the number of Americans aged 65 and older will more than double to 71 million, roughly 20 percent of the U.S. population, by the year 2030. Consequently, the importance of protecting this growing demographic is as important as ever, and it is encouraging to see that Finra is strengthening regulations to curb this activity.
Greg Brumbeloe is vice president at Kaplan Financial Education and has more than 34 years of experience in financial services and financial services training.