[Federal Register Volume 86, Number 121 (Monday, June 28, 2021)]
[Notices]
[Pages 34084-34096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13653]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92225; File No. SR-FINRA-2021-016]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
Rule 2165 (Financial Exploitation of Specified Adults)
June 22, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on June 9, 2021, the Financial Industry Regulatory
Authority, Inc. (``FINRA'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by FINRA. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend Rule 2165 (Financial Exploitation of
Specified Adults) to permit member firms to: (1) Extend a temporary
hold on a disbursement of funds or securities or a transaction in
securities for an additional 30-business days if the member firm has
reported the matter to a state regulator or agency or a court of
competent jurisdiction; and (2) place a temporary hold on a securities
transactions where there is a reasonable belief of financial
exploitation.
The text of the proposed rule change is available on FINRA's
website at http://www.finra.org, at the principal office of FINRA and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Protection of Senior Investors
The protection of senior investors is a top priority for FINRA.
FINRA has prioritized protecting senior investors and addressed
financial exploitation of senior investors in numerous ways, including:
Identifying senior investor issues as an examination
priority; \3\
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\3\ See 2019 Risk Monitoring and Examination Priorities Letter
(January 2019) available at https://www.finra.org/industry/2019-annual-risk-monitoring-and-examination-priorities-letter.
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Launching the dedicated FINRA Securities Helpline for
Seniors[supreg]--available at 844-57-HELPS--to provide
[[Page 34085]]
senior investors and their family members with a supportive place to
get assistance from specially trained FINRA staff related to concerns
they have with their brokerage accounts and investments; \4\
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\4\ See http://www.finra.org/investors/highlights/finra-securities-helpline-seniors.
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Creating national standards that give member firms tools--
including permitting firms to place temporary holds on disbursements
when they have a reasonable belief of financial exploitation and
requiring firms to request information from customers about a trusted
contact--to address suspected financial exploitation of senior
investors and other vulnerable adults (i.e., FINRA Rules 2165 and 4512
(Customer Account Information)); \5\
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\5\ See Regulatory Notice 17-11 (March 2017).
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Collaborating with the North American Securities
Administrators Association (NASAA) and the SEC to address senior
investor protection, including issuing a Senior Safe Act Fact Sheet
designed to raise awareness among member firms, investment advisers and
transfer agents about the Act and its immunity provisions; \6\
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\6\ See http://www.finra.org/sites/default/files/senior_safe_act_factsheet.pdf.
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Issuing alerts and articles educating investors about
important issues and highlighting risks facing senior investors; \7\
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\7\ See, e.g., articles such as Protecting Seniors from
Financial Exploitation; Investor Alerts such as Power of Attorney
and Your Investments--10 Tips, Plan for Transition: What You Should
Know About the Transfer of Brokerage Account Assets on Death;
Seniors Beware: What You Should Know About Life Settlements; and
FINRA's Retirement web page for investors.
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Conducting and funding research on senior investors and
financial fraud, and engaging with national, state and grassroots
partners to develop and distribute fraud prevention resources, educate
consumers, and provide training for law enforcement professionals,
victim advocates, and other people on the front lines of fighting
financial fraud;
Issuing Regulatory Notices emphasizing member firms'
obligations to senior investors and providing guidance on how to
fulfill those obligations; \8\ and
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\8\ See, e.g., Regulatory Notice 07-43 (Sept. 2007) (reminding
member firms of their obligations relating to senior investors and
highlighting industry practices to serve these customers);
Regulatory Notice 09-42 (July 2009) (reminding member firms of their
obligations with variable life settlement activities); Regulatory
Notice 11-52 (Nov. 2011) (reminding member firms of their
obligations regarding the supervision of associated persons using
senior designations); Regulatory Notice 16-12 (Apr. 2016) (providing
guidance on member firm responsibilities for sales of pension income
stream products); and Regulatory Notice 17-11 (Mar. 2017)
(discussing new senior rules and potential financial exploitation of
seniors).
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Bringing disciplinary actions for misconduct against
senior investors.\9\
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\9\ See, e.g., John W. Cutshall, Order Accepting Offer of
Settlement, Case ID 2014041590801 (April 11, 2019); Steven Anthony
Olejniczak, Letter of Acceptance, Waiver and Consent, Case ID
2016050107901 (May 8, 2017).
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Retrospective Review
In August 2019, FINRA launched a retrospective review to assess the
effectiveness and efficiency of its rules and administrative processes
that help protect senior investors from financial exploitation. The
retrospective review process has two phases: The assessment phase and
the action phase.\10\ During the assessment phase, FINRA first sought
comment in Regulatory Notice 19-27 (August 2019) on several questions
with respect to addressing financial exploitation and other
circumstances of financial vulnerability for senior investors. FINRA
received 22 comment letters to Regulatory Notice 19-27.\11\
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\10\ The stakeholders who provided input during the assessment
phase of the retrospective review are collectively referred to
herein as the ``Retrospective Review Stakeholders.''
\11\ See Letter from Megan Valent, Legal Intern, and Teresa J.
Verges, Director, University of Miami School of Law, to Jennifer
Piorko Mitchell, Office of the Corporate Secretary, FINRA, dated
Oct. 1, 2019; Letter from Jennifer L. Szaro, Lara May & Associates,
LLC, and Robert L. Hamman, President, First Asset Financial Inc., to
Jennifer Piorko Mitchell, Office of the Corporate Secretary, FINRA,
dated Oct. 4, 2019; Letter from William A. Jacobson, Esq., Clinical
Professor of Law and Director, Securities Law Clinic Cornell Law
School, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 7, 2019; Letter from Kathleen Quinn,
Board President, National Adult Protective Services Association, to
Jennifer Piorko Mitchell, Office of the Corporate Secretary, FINRA,
dated Oct. 7, 2019; Letter from Joe Snyder, Chair, Philadelphia
Financial Exploitation Task Force dated Oct. 7, 2019; Letter from
Seth A. Miller, General Counsel, Executive Vice President, and Chief
Risk Officer, Cambridge Investment Research, Inc., to Jennifer
Piorko Mitchell, Office of the Corporate Secretary, FINRA, dated
Oct. 8, 2019; Letter from Eric Arnold, Clifford Kirsch and Holly
Smith of Eversheds Sutherland on behalf of the Committee of Annuity
Insurers, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 8, 2019; Letter from Christopher W.
Bok, Director, Financial Information Forum, to Jennifer Piorko
Mitchell, Office of the Corporate Secretary, FINRA, dated Oct. 8,
2019; Letter from Marc Fitapelli, Esq., Fitapelli Kurta, to Jennifer
Piorko Mitchell, Office of the Corporate Secretary, FINRA, dated
Oct. 8, 2019; Letter from Robin M. Traxler, Senior Vice President,
Policy & Deputy General Counsel, Financial Services Institute, to
Jennifer Piorko Mitchell, Office of the Corporate Secretary, FINRA,
dated Oct. 8, 2019; Letter from Maureen K. Paparo, Legal Intern,
Lincoln Square Legal Services, Inc., to Jennifer Piorko Mitchell,
Office of the Corporate Secretary, FINRA, dated Oct. 8, 2019; Letter
from Courtney Rogers Reid, Lead Counsel, Broker-Dealer and
Investment Adviser Practice Group, MML Investors Services, LLC, to
Jennifer Piorko Mitchell, Office of the Corporate Secretary, FINRA,
dated Oct. 8, 2019; Letter from Christopher Gerold, President,
NASAA, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 8, 2019; Letter from Nancy Brown,
President and Co-Chair, and Dian VanderWell, Opportunity Alliance
Nevada, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 8, 2019; Letter from Christine Lazaro,
President, and Samuel B. Edwards, Executive Vice President, Public
Investors Advocate Bar Association, to Jennifer Piorko Mitchell,
Office of the Corporate Secretary, FINRA, dated Oct. 8, 2019; Letter
from Lisa J. Bleier, Managing Director, SIFMA, dated Oct. 8, 2019;
Letter from Christine Lazaro, Professor of Clinical Legal Education
and Director, St. John's University School of Law Securities
Arbitration Clinic, to Jennifer Piorko Mitchell, Office of the
Corporate Secretary, FINRA, dated Oct. 8, 2019; Letter from Alice L.
Stewart, Director, and Rachael T. Shaw, Adjunct Professor,
University of Pittsburgh School of Law--Securities Arbitration
Clinic, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 8, 2019; Letter from Ron Long, Head of
Elder Client Initiatives Center of Excellence, Wells Fargo &
Company, to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 8, 2019; Letter from Erin K. Lineham,
Associate General Counsel--Compliance, Raymond James & Associates,
Inc., to Jennifer Piorko Mitchell, Office of the Corporate
Secretary, FINRA, dated Oct. 29, 2019; Letter from Marin E. Gibson,
Managing Director and Associate General Counsel, SIFMA, dated Nov.
15, 2019; Letter from Anonymous dated Feb. 26, 2020.
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In addition, FINRA obtained input from several advisory committees
comprising member firms of different sizes and business models,
investor protection advocates, member firms, and trade associations.
FINRA also obtained the perspective of its operating departments that
touch the rules and their administration. Moreover, FINRA considered
examination observations and findings involving senior issues. In this
regard, FINRA previously had identified as an examination priority
reviewing member firms' controls regarding Rule 2165, to the extent
firms anticipated using the rule's safe harbor, and Rule 4512's
trusted-contact provision.\12\ As part of these reviews, FINRA looked
at whether member firms had clearly defined policies and procedures and
sought information about firms' early experiences with these
provisions.\13\
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\12\ See 2019 Annual Risk Monitoring and Examination Priorities
Letter (Jan. 22, 2019).
\13\ See id.
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Finally, FINRA developed an anonymous survey that was distributed
to all member firms in the first quarter of 2020. The purpose of the
survey was to collect information in order to validate the feedback
received and to provide an additional opportunity for all member firms
to provide their views.\14\
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\14\ Survey respondents were permitted to skip survey questions.
Information in this proposed rule change regarding the percentage of
survey respondents for a particular question reflects the percentage
of respondents for that question, not the percentage of respondents
for the survey as a whole. Approximately 190 responses were received
for each top-level (non-nested) question. Therefore, unless
indicated otherwise, the reader can assume that the percentages are
based on approximately 190 responses.
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[[Page 34086]]
The review indicated that FINRA's steps to protect seniors have
provided helpful and effective tools in the fight against financial
exploitation, but it also suggested some additional tools, guidance and
rule changes. In October 2020, FINRA published Regulatory Notice 20-34
(October 2020): (1) Summarizing the retrospective rule review process,
including the predominant themes that emerged from Retrospective Review
Stakeholder feedback; (2) seeking comment on proposed amendments to
Rule 2165 to further address suspected financial exploitation of senior
investors and other specified adults; and (3) providing guidance to aid
member firms and senior investors and other specified adults.\15\
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\15\ The proposed amendments to Rule 2165 set forth in
Regulatory Notice 20-34 are referred to herein as the ``Notice 20-34
Proposal.''
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Rule 2165
Rule 2165 is the first uniform national standard for placing
temporary holds on disbursements to address suspected financial
exploitation.\16\ Rule 2165 permits a member firm to place a temporary
hold on a disbursement of funds or securities from the account of a
``specified adult'' \17\ customer when the firm reasonably believes
that financial exploitation of that adult has occurred, is occurring,
has been attempted or will be attempted. Prior to the adoption of Rule
2165, some member firms expressed concern that placing a temporary hold
on suspicious disbursements was not explicitly permitted by FINRA
rules.
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\16\ See Securities Exchange Act Release No. 79964 (Feb. 3,
2017), 82 FR 10059 (Feb. 9, 2017) (Notice of Filing of Partial
Amendment No. 1 and Order Granting Accelerated Approval of File No.
SR-FINRA-2016-039).
\17\ The definition of ``specified adult'' in Rule 2165 covers
those investors who are particularly susceptible to financial
exploitation. A ``specified adult'' is (A) a natural person age 65
and older or (B) a natural person age 18 and older who the member
reasonably believes has a mental or physical impairment that renders
the individual unable to protect his or her own interests. See Rule
2165(a)(1). Supplementary Material .03 to Rule 2165 provides that a
member firm's reasonable belief that a natural person age 18 and
older has a mental or physical impairment that renders the
individual unable to protect his or her own interests may be based
on the facts and circumstances observed in the member firm's
business relationship with the person.
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To address these concerns, Rule 2165 provides member firms and
their associated persons with a safe harbor from FINRA Rules 2010
(Standards of Commercial Honor and Principles of Trade), 2150 (Improper
Use of Customers' Securities or Funds; Prohibition Against Guarantees
and Sharing in Accounts) and 11870 (Customer Account Transfer
Contracts) when member firms exercise discretion in placing temporary
holds on disbursements of funds or securities from the accounts of
specified adults consistent with the requirements of Rule 2165. FINRA
encourages member firms to take advantage of the Rule 2165 safe harbor
where there is a reasonable belief of customer financial exploitation.
Rule Safeguards
Rule 2165 also includes important safeguards that are designed to
ensure that there is not a misapplication of the rule, including the
requirements that:
(1) A member firm provide notification of the hold and the reason
for the hold to all parties authorized to transact business on the
account, including the customer and the customer's trusted contact
person no later than two business days after the date that the member
firm first placed the hold; \18\
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\18\ See Rule 2165(b)(1)(B).
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(2) A member firm that places a hold pursuant to the rule
immediately initiate an internal review of the facts and circumstances
that caused the member to reasonably believe that the financial
exploitation of the specified adult has occurred, is occurring, has
been attempted, or will be attempted; \19\
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\19\ See Rule 2165(b)(1)(C).
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(3) In addition to the general supervisory and recordkeeping
requirements of FINRA Rules 3110, 3120, 3130, 3150, and Rule 4510
Series, a member relying on the rule establish and maintain written
supervisory procedures reasonably designed to achieve compliance with
the rule, including, but not limited to, procedures related to the
identification, escalation and reporting of matters related to the
financial exploitation of specified adults; \20\
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\20\ See Rule 2165(c)(1).
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(4) Any request for a hold be escalated to a supervisor, compliance
department or legal department rather than allowing an associated
person handling an account to independently place a hold; \21\
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\21\ See Rule 2165(c)(2).
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(5) A member firm relying on the rule develop and document training
policies or programs reasonably designed to ensure that associated
persons comply with the requirements of the rule; \22\ and
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\22\ See Supplementary Material .02 to Rule 2165.
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(6) A member firm relying on the rule retain records related to
compliance with the rule, which shall be readily available to FINRA,
upon request.\23\
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\23\ See Rule 2165(d).
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Importantly, a temporary hold pursuant to Rule 2165 may be placed
on a particular suspicious disbursement(s) (e.g., a payment related to
a commonly known scam, such as a lottery scam) but not on non-
suspicious disbursements (e.g., a regular mortgage payment or assisted
living facility payment).
Responding to Suspected Financial Exploitation
Temporary holds on disbursements have played a critical role in
providing member firms a way to quickly respond to suspicions of
financial exploitation before potentially ruinous losses occur for the
customer. For example, FINRA's report for the five-year anniversary of
the FINRA Securities Helpline for Seniors[supreg] highlights several
matters that illustrate the positive impact of placing temporary holds
on disbursements to address financial exploitation.\24\ The matters
include temporary holds placed by member firms to prevent senior
investors from losing:
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\24\ See Protecting Senior Investors 2015-2020: An Update on the
FINRA Securities Helpline for Seniors, Other FINRA Initiatives and
Member Firm Practices (Apr. 2020) (Senior Helpline Anniversary
Report).
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$200,000 (representing approximately two-thirds of the
investor's account) related to a Central Intelligence Agency (CIA)
lawsuit scam;
$10,000 in a lottery scam;
$60,000 in a romance scam; and
$50,000 to financial exploitation by a brother-in-law.
Proposed Amendments to Rule 2165
The retrospective review indicated that Rule 2165 has been an
effective tool in the fight against financial exploitation,\25\ but
supported amendments to permit member firms to: (1) Extend a temporary
hold on a disbursement of funds or securities or a transaction in
securities for an additional 30-business days if the member firm has
reported the matter to a state regulator or agency or a court of
[[Page 34087]]
competent jurisdiction; and (2) place a temporary hold on a securities
transaction where there is a reasonable belief of financial
exploitation.
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\25\ During exams in 2019 focusing on Rule 2165, FINRA observed
that large firms were more likely than small firms to place
temporary holds pursuant to Rule 2165. Some member firms that
declined to use the safe harbor cited litigation risks associated
with placing temporary holds or in evaluating whether a customer is
being financially exploited. This is consistent with FINRA's survey
responses with large firms indicating that they had placed a
temporary hold pursuant to the rule in a significantly larger
percentage than mid-size or small firms. Thirty-one survey
respondents had placed a temporary hold pursuant to Rule 2165.
Eighty-four percent of large firm respondents had placed a hold
pursuant to Rule 2165, while only 6% of all other sized firm
respondents had placed a hold pursuant to Rule 2165.
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Hold Period
Rule 2165 currently allows a member firm to place a temporary hold
on a specified adult customer's account for up to 25-business days if
the criteria in the rule are satisfied. More specifically, the
temporary hold authorized by Rule 2165 would expire not later than 15-
business days after the date that the member first placed the temporary
hold on the disbursement of funds or securities, unless otherwise
terminated or extended by a state regulator or agency or court of
competent jurisdiction.\26\ In addition, provided that the member
firm's internal review of the facts and circumstances supports its
reasonable belief that the financial exploitation of the specified
adult has occurred, is occurring, has been attempted or will be
attempted, the rule permits the member to extend the temporary hold for
an additional 10-business days, unless otherwise terminated or extended
by a state regulator or agency or court of competent jurisdiction.\27\
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\26\ See Rule 2165(b)(2).
\27\ See Rule 2165(b)(3).
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Retrospective Review Stakeholders and commenters to the Notice 20-
34 Proposal generally supported extending the current 25-business day
hold period to provide member firms with a longer period to resolve
matters.\28\ These Retrospective Review Stakeholders and commenters to
the Notice 20-34 Proposal indicated that the current period may not be
sufficient when a matter is under consideration by a state regulator,
state agency or court. Notably, this view was shared by NAPSA and the
Philadelphia Financial Exploitation Task Force in comments to
Regulatory Notice 19-27 and the Notice 20-34 Proposal, with both
commenters stating that adult protective services (APS) agencies, state
regulators and law enforcement typically need more time to conduct
thorough investigations. In contrast, in comments to Regulatory Notice
19-27 and the Notice 20-34 Proposal, NASAA supported retaining the
current 25-business day period, which aligns with the hold period
provided in the NASAA Model Act to Protect Vulnerable Adults from
Financial Exploitation (NASAA Model Act).\29\
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\28\ See, e.g., comments to the Notice 20-34 Proposal from CAI,
Cambridge, Commonwealth, Edward Jones, Fidelity, FSI, IRI, Miami
Investor Rights Clinic, MMLIS, NAPSA, Norcross, Philadelphia
Financial Exploitation Task Force, SIFMA and Wells Fargo.
\29\ The NASAA Model Act is available at https://www.nasaa.org/industry-resources/senior-issues/model-act-to-protect-vulnerable-adults-from-financial-exploitation/.
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During exams in 2019 focusing on Rule 2165, member firms expressed
to FINRA the need for additional time to conduct investigations and
resolve matters.\30\ Member firms were asked in the survey distributed
to member firms about possible impediments to resolving a matter within
the current 25-business day hold period provided by Rule 2165.
Approximately 53% of survey respondents stated that they had been
unable to resolve a matter within the 25-business day period. The most
common reason was that the matter was under consideration by a state
agency (such as APS) or a court. Other common reasons included: (1) The
customer did not respond to inquiries from the firm; or (2) the
customer did not believe that he or she was being financially
exploited. For matters that took longer to resolve than the 25-business
day period, approximately 35% of survey respondents indicated that it
took on average 26-50 days to resolve the matter and approximately 59%
of survey respondents indicated that it took on average 51-100 days to
resolve the matter.
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\30\ In 2019, FINRA identified as an examination priority: (1)
Reviewing member firms' controls regarding their obligations under
trusted contact person-related amendments to FINRA Rule 4512 and
Rule 2165, to the extent that firms anticipate placing temporary
holds on disbursements pursuant to the Rule 2165 safe harbor,
including whether firms have clearly defined policies and procedures
or practices; and (2) learning about firms' early experiences with
these provisions. See 2019 Annual Risk Monitoring and Examination
Priorities Letter (Jan. 22, 2019).
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FINRA recognizes that placing or extending a temporary hold on a
disbursement is a serious step for a member and the affected customer.
While FINRA recognizes that customers may be affected by temporary
holds, the costs of financial exploitation can be devastating to
customers, particularly older customers who rely on their savings and
investments to pay their living expenses and who may not have the
ability to offset a significant loss over time. Furthermore, the rule's
safeguards are designed to ensure that there is not a misapplication of
the rule.
To provide member firms with additional time to resolve matters and
for APS agencies, state regulators and law enforcement to conduct
thorough investigations, FINRA is proposing amending Rule 2165 to
permit extending a temporary hold on a disbursement of funds or
securities or a transaction in securities for an additional 30-business
days if the member firm has reported the matter to a state regulator or
agency or a court of competent jurisdiction.\31\
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\31\ The 30-business day hold period in proposed Rule 2165(b)(4)
would be in addition to the 15-business day hold in Rule 2165(b)(2)
and the 10-business day hold in Rule 2165(b)(3).
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In addition, Rule 2165(d) requires members to retain records
related to compliance with the rule, which shall be readily available
to FINRA, upon request. To evidence compliance with Rule 2165 in
placing or extending a temporary hold, FINRA is proposing to require
that a member firm retain records of the reason and support for any
extension of a temporary hold, including information regarding any
communications with or by a state regulator or agency of competent
jurisdiction or a court of competent jurisdiction.\32\
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\32\ See proposed Rule 2165(d)(6).
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Transactions in Securities
While placing a hold pursuant to Rule 2165 stops funds or
securities from leaving a customer's account, the rule currently does
not apply to transactions in securities.\33\ Retrospective Review
Stakeholders and commenters to the Notice 20-34 Proposal generally
supported extending Rule 2165 to permit a member firm to place a
temporary hold on a transaction in securities when the firm has a
reasonable belief that the customer is being financially exploited.\34\
Even if a temporary hold is placed on a disbursement out of the
customer's account, these Retrospective Review Stakeholders and
commenters to the Notice 20-34 Proposal noted that executing a related
transaction may result in significant financial consequences for the
customer (e.g., adverse tax consequences, surrender charges, the
inability to regain access to a sold investment that has been closed to
new investors or trading by a perpetrator in inappropriate high risk or
illiquid securities).
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\33\ For example, Rule 2165 currently would not apply to a
customer's order to sell his shares of a stock. However, if a
customer requested that the proceeds of a sale of shares of a stock
be disbursed out of his account at the member firm, then the rule
could apply to the disbursement of the proceeds where the customer
is a ``specified adult'' and there is reasonable belief of financial
exploitation.
\34\ See, e.g., comments to the Notice 20-34 Proposal from CAI,
Cambridge, Commonwealth, Edward Jones, Fidelity, FSI, IRI, LPL,
Miami Investor Rights Clinic, MMLIS, NAPSA, Norcross, Philadelphia
Financial Exploitation Task Force, SIFMA and Wells Fargo.
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Currently, there are 34 states with laws that allow investment
advisers or broker-dealers to place some form of hold. Several
Retrospective Review
[[Page 34088]]
Stakeholders noted that while the NASAA Model Act does not extend to
transactions, 20 of those 34 states (with approximately half of the
U.S. population) have enacted laws permitting investment advisers and
broker-dealers to place temporary holds on disbursements and
transactions.\35\
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\35\ As of June 2021, the following states permit holds on
disbursement and transactions: Arkansas, Arizona, California,
Florida, Iowa, Kentucky, Minnesota, Mississippi, Missouri, Nebraska,
New Jersey, New Mexico, North Dakota, Oklahoma, South Carolina,
Texas, Utah, Virginia, Washington and West Virginia.
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While some state laws permit placing holds on transactions, FINRA
is proposing to amend Rule 2165 to create the first uniform national
standard for placing holds on securities transactions related to
suspected financial exploitation. Under the safe harbor approach, a
member firm would be permitted, but not required, to place a temporary
hold on a transaction when there is a reasonable belief that the
customer is being financially exploited.
FINRA recognizes that placing a temporary hold on a transaction is
a serious step for a member firm and the affected customer. But FINRA
also recognizes that placing a temporary hold on the underlying
transaction may prevent significant negative financial consequences for
the customer. These negative financial consequences can result even if
a temporary hold is placed on any related disbursement of funds out of
the customer's account. Moreover, as discussed above, the rule includes
important safeguards designed to avoid misapplication of the rule.
Need for the Proposed Amendments
Retrospective Review Stakeholders and commenters to the Notice 20-
34 Proposal consistently indicated the prevalence of and problems
associated with financial exploitation of senior investors,\36\
including the potential for significant and longstanding harm to
customers.\37\ Moreover, Retrospective Review Stakeholders and
commenters to the Notice 20-34 Proposal generally agree that member
firms need tools to address suspected financial exploitation.\38\
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\36\ See, e.g., comments to the Notice 20-34 Proposal from
PIABA. See also Consumer Financial Protection Bureau, Office of
Financial Protection for Older Americans, Suspicious Activity
Reports on Elder Financial Exploitation: Issues and Trends (Feb.
2019) (highlighting that SAR filings on elder financial exploitation
quadrupled from 2013 to 2017). See also U.S. Securities and Exchange
Commission, Office of the Investor Advocate, Elder Financial
Exploitation (June 2018) (providing an overview of studies on the
prevalence of senior financial exploitation).
\37\ See, e.g., discussion in the Senior Helpline Anniversary
Report regarding a member firm placing a temporary hold to prevent a
senior investor from losing $200,000 (representing approximately
two-thirds of the investor's account) related to a CIA lawsuit scam.
\38\ See, e.g., in comments to the Notice 20-34 Proposal the
Miami Investor Rights Clinic stated that it ``fully supports'' the
proposed amendments as they will provide greater protection to
seniors and vulnerable adults that may be victims of financial
exploitation. IRI also stated that the proposed amendments will
better enable firms to prevent the financial exploitation of
vulnerable Americans.
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As discussed in greater detail in section C infra, some
Retrospective Review Stakeholders and commenters to the Notice 20-34
Proposal expressed concern that a temporary hold could be harmful to
customers or that Rule 2165 could be misused by member firms. Regarding
the potential of customer harm, it is important to consider that Rule
2165 is available only if the member firm has a reasonable belief that
the customer is being financially exploited. Moreover, the temporary
hold may be placed only on the suspicious disbursement (or transaction
if the proposed amendment to extend the rule to transactions is
approved). Even if the member firm has placed a temporary hold on a
suspicious disbursement or transaction pursuant to Rule 2165, a
temporary hold may not be placed on non-suspicious disbursements or
transactions (e.g., a regular mortgage payment).
In evaluating concerns about potential misuse of Rule 2165, neither
FINRA nor commenters were able to identify any reported customer
complaints on Forms U4 or U5 or pursuant to Rule 4530 related to
placing a temporary hold pursuant to Rule 2165. Moreover, respondents
to FINRA's survey to member firms indicated that they had not reported
a complaint on Form U4 or Form U5 or pursuant to Rule 4530 related to
placing any temporary holds. In addition, neither FINRA nor the states
have brought any disciplinary action due to misuse of Rule 2165 or any
state temporary hold law.\39\
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\39\ This lack of disciplinary action by FINRA and the states is
also noted in the NASAA's comment letter to the Notice 20-34
Proposal.
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The demonstrated and potential benefits of Rule 2165 weigh in favor
of the proposed rule change. Notably, Rule 2165 has been used by member
firms to address suspected financial exploitation and these temporary
holds have prevented significant financial harm to customers.\40\
Moreover, Retrospective Review Stakeholders and commenters to the
Notice 20-34 Proposal stressed that, even if a temporary hold is placed
on a disbursement of funds or securities, a customer can experience
significant negative financial consequences if a suspicious transaction
is permitted.\41\
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\40\ See, e.g., Protecting Senior Investors 2015-2020: An Update
on the FINRA Securities Helpline for Seniors, Other FINRA
Initiatives and Member Firm Practices (Apr. 2020).
\41\ See, e.g., comments to the Notice 20-34 Proposal from
Edward Jones and the Miami Investor Rights Clinic.
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Some Retrospective Review Stakeholders and commenters to the Notice
20-34 Proposal believe that the proposed extension of the hold period
is too long and could be harmful to customers.\42\ Commenters to the
Notice 20-34 Proposal stated that some matters can be quickly resolved
after placing a temporary hold, but complex matters that involve
investigations by state regulators or agencies or legal actions in a
court (e.g., financial exploitation of an elderly customer by a family
member or caregiver) may need additional time to resolve.\43\ In
considering the appropriate time period, it is notable that NAPSA and
the Philadelphia Financial Exploitation Task Force--representing APS
programs which play a critical role in investigating suspicions of
financial exploitation--also expressed in their comments to the Notice
20-34 Proposal the need for additional time to conduct investigations.
NAPSA's comment letter to the Notice 20-34 Proposal also shared data in
support of the need for a longer hold period in Rule 2165 that the
average investigation duration of reported matters to the federal
National Adult Maltreatment Reporting System (NAMRS) is 52.6 days.
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\42\ See, e.g., comments to the Notice 20-34 Proposal from NASAA
and the Pittsburgh Clinic.
\43\ See, e.g., comments to the Notice 20-34 Proposal from
Edward Jones.
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In considering the proposed extension of Rule 2165 to securities
transactions, it is notable that approximately 50% of the U.S.
population lives in a state that permits broker-dealers and investment
advisers to place holds on suspicious securities transactions pursuant
to state law.
These state laws represent a patchwork where some customers may be
afforded greater protection from financial exploitation than other
customers. In contrast, Rule 2165 provides a uniform national standard
for placing temporary holds when there is a reasonable belief of
financial exploitation. Moreover, Rule 2165 incorporates numerous
safeguards that apply to each temporary hold and that are designed to
ensure that there is not a misapplication of the rule.
If the Commission approves the proposed rule change, FINRA will
announce the implementation date of the proposed rule change in a
Regulatory Notice. The implementation date will be no later than 180
days following publication of the Regulatory
[[Page 34089]]
Notice announcing Commission approval.
2. Statutory Basis
The proposed rule change is consistent with the provisions of
Section 15A(b)(6) of the Act,\44\ which requires, among other things,
that FINRA rules must be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The proposed rule change will promote investor
protection by allowing for additional time for firms to resolve matters
and for APS agencies, state regulators and law enforcement to conduct
thorough investigations of suspected financial exploitation. Customers
would benefit from this extension in instances where the additional
time allows for a positive identification of financial exploitation and
retention of the disbursement amount within the account. The proposed
rule change also will allow firms to place temporary holds on
transactions, which should prevent harm to exploited customers such as
being subject to adverse tax consequences, early withdraw penalties or
investments that do not align with their investor profiles. Moreover,
the rule incorporates numerous safeguards that apply to each temporary
hold and that are designed to ensure that there is not a misapplication
of the rule.
---------------------------------------------------------------------------
\44\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change would result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. All member firms would be
subject to the proposed rule change.
Economic Impact Assessment
FINRA has undertaken an economic impact assessment, as set forth
below, to further analyze the regulatory need for the proposed rule
change, its potential economic impacts, including anticipated costs,
benefits, and distributional and competitive effects, relative to the
current baseline, and the alternatives FINRA considered in assessing
how best to meet its regulatory objective.
Regulatory Need
FINRA is active in its efforts to protect senior investors from
financial exploitation. In the context of these efforts, and with
evidence of a growing trend of such exploitation,\45\ FINRA conducted a
review of relevant existing rules and administrative processes that
help protect senior investors from financial exploitation. Through this
review, FINRA has received feedback on the effectiveness and efficiency
of Rule 2165.
---------------------------------------------------------------------------
\45\ See supra note 36.
---------------------------------------------------------------------------
Economic Baseline
The economic baseline for the proposed rule amendments is the
current Rule 2165 and its use by member firms, as well as existing firm
policies and state laws related to protecting senior investors. As
discussed above, in August 2019, FINRA launched a retrospective review
to assess the effectiveness and efficiency of its rules and
administrative processes that help protect senior investors from
financial exploitation. To conduct the assessment phase of the
retrospective rule review, FINRA first sought comment in Regulatory
Notice 19-27. FINRA obtained input from several advisory committees
comprising member firms of different sizes and business models,
investor protection advocates, and member firms, and from trade
associations. In addition, FINRA obtained the perspective of its
operating departments that touch the rules and their administration.
FINRA also distributed a survey to all member firms in the first
quarter of 2020, to which a subset of firms, ranging from small to
large firms, responded. The purpose of the survey was to collect
information and to provide member firms an additional opportunity to
provide their views. The economic baseline, regarding the current
application of the rule by firms and the effectiveness and efficiency
of the rule, is established using the information obtained during the
assessment phase.
As noted above, with respect to the use of Rule 2165 in placing a
temporary hold on disbursements, of the member firms that indicated
having placed a temporary hold,\46\ approximately 53% of survey
respondents stated that the firm had been unable to resolve the matter
within the 25-business day period provided by the rule. For firms
responding that any matter took longer to resolve than the 25-business
day period, approximately 35% indicated that it took on average 26-50
days to resolve the matter and approximately 59% indicated that it took
on average 51-100 days to resolve the matter.
---------------------------------------------------------------------------
\46\ Thirty-one firms responded in the survey that they had
placed a temporary hold. Out of the 31 firms that indicated that
they had placed a temporary hold, 17 firms indicated that it took
more than the 25-business day period to resolve the matter, as
currently provided in Rule 2165.
---------------------------------------------------------------------------
With respect to the issue of placing a temporary hold on
transactions, currently 20 states (with approximately half of the U.S.
population) have enacted laws permitting investment advisers and
broker-dealers to place temporary holds on disbursements and
transactions.
Economic Impacts
FINRA has analyzed the potential costs and benefits of the proposed
amendments, and the different parties that are expected to be affected.
FINRA has identified senior investors and member firms that serve
senior investors as the main parties to be impacted by the proposed
amendments.
The proposed amendments to Rule 2165 would permit extending a
temporary hold for an additional 30-business days if the member firm
has reported the matter to a state agency or a court of competent
jurisdiction. FINRA believes that allowing an extension to the
temporary hold period would provide firms additional time to resolve
matters and for APS agencies, state regulators and law enforcement to
conduct thorough investigations of suspected financial exploitation.
Moreover, extensions may allow for greater collaboration and
interaction between the member firm placing the hold and other
authorities or regulators, on a local, state or national level.
Customers would benefit from this extension in instances where the
additional time allows for a positive identification of financial
exploitation and retention of the disbursement amount within the
account. Alternatively, if the additional time leads to a determination
that no financial exploitation occurred, customers may incur costs from
the extended delay in access to the funds.
The proposed amendments would also extend Rule 2165 to permit a
member firm to place a temporary hold on a transaction in securities
when the firm has a reasonable belief that the customer is being
financially exploited. Twenty states, together containing approximately
half of the U.S. population, already permit firms to place temporary
holds on transactions. The proposed amendments would impact firms in
all states by providing a safe harbor under FINRA rules for firms to
place holds on transactions. The extent of the impact would vary across
firms depending on their decision to take advantage of the proposed
extension of Rule 2165 to
[[Page 34090]]
transactions.\47\ The proposed amendments would also impact the
customers of those firms. In instances when a firm's hold on a
transaction prevented financial exploitation, the customer whose
transaction was held would benefit from not incurring the negative
financial consequences of the transaction. In instances when a
transaction hold was executed and no financial exploitation was found,
the economic impact of the hold stems primarily from the magnitude of
the security's price movement (positive or negative) between the time
the hold was placed and the time it was lifted.
---------------------------------------------------------------------------
\47\ When asked in the survey about FINRA extending Rule 2165 to
transactions, respondents were evenly split with 50% anticipating
that the member firm would place holds on transactions pursuant to
amended Rule 2165 and 50% anticipating that the firm would not place
holds.
---------------------------------------------------------------------------
Alternatives Considered
FINRA considered various alternatives to the proposed rule
amendments. First, FINRA considered different possible extensions of
the temporary hold period, ranging from no extension to an extension of
up to 75-business days. On the one hand, a longer temporary hold period
would allow member firms more time to investigate and contact the
relevant parties, as well as obtain input from a state regulator,
agency, or court if needed. Alternatively, an extended temporary hold
period could result in increased costs to both investors and firms.\48\
These include increased costs to investors from lost investment
opportunities or liquidity problems and increased costs to firms from
legal challenges to investigations, all of which are anticipated to be
related to the length of the hold on disbursements. Considering these
factors, as well as information from the various outreach efforts and
stakeholder engagements, FINRA believes that the proposal strikes a
balance across the spectrum of possible options.
---------------------------------------------------------------------------
\48\ See discussion in ``Economic Impacts'' section above in
section B, ``Hold Period'' section below in section C, and
Regulatory Notice 20-34.
---------------------------------------------------------------------------
Second, FINRA considered not extending Rule 2165 to transactions,
but rather keeping the temporary hold option only for disbursements.
FINRA weighed the costs and benefits of doing so, as discussed above,
also considering that some states already permit such a hold on
transactions. Ultimately, FINRA has found the proposed amendment to
expand Rule 2165 to transactions to strike an appropriate balance
between regulatory burden, investor protection and investor choice.
Third, FINRA considered requiring firms to place temporary holds,
for either disbursements or transactions, rather than permitting it.
FINRA believes that providing firms with the discretion of placing a
hold, versus a requirement, results in incentives to use the hold
option in a way that ultimately benefits both the firm and its'
customers.\49\
---------------------------------------------------------------------------
\49\ See Bruce I. Carlin, Tarik Umar, and Hanyi Yi,
Deputization, National Bureau of Economic Research Working Paper No.
27225 (May 2020) (discussing the benefits of providing financial
institutions tools to address suspected financial exploitation
versus requiring specific actions).
---------------------------------------------------------------------------
Finally, FINRA considered extending Rule 2165 to situations where a
firm has a reasonable belief that one of its customers is exhibiting
signs of diminished capacity or cognitive decline, affecting the
customers' ability to protect their own financial interests, without
any evidence of financial exploitation. FINRA believes that the
associated costs with establishing such a standard outweigh the
potential benefits. Such an extension would give discretion to member
firms that could directly or indirectly impede informed investor
choice, with potential costs that might exceed the potential benefits
from investor protection.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The proposed rule change was published for comment in Regulatory
Notice 20-34. FINRA received 19 comment letters in response to the
Notice 20-34 Proposal. A copy of the Notice 20-34 Proposal is attached
[sic] as Exhibit 2a. Copies of the comment letters received in response
to the Notice 20-34 Proposal are attached [sic] as Exhibit 2c.\50\
---------------------------------------------------------------------------
\50\ See Exhibit 2b for a list of abbreviations assigned to
commenters.
---------------------------------------------------------------------------
The comments and FINRA's responses are set forth in detail below.
Support for the Notice 20-34 Proposal
Fourteen commenters expressed support for the Notice 20-34
Proposal.\51\ Several commenters stated that the proposed amendments
will better protect vulnerable investors from financial exploitation.
For example, Miami Investor Rights Clinic stated that it ``fully
supports'' the proposed amendments as they will provide greater
protection to seniors and vulnerable adults that may be victims of
financial exploitation. IRI also stated that the proposed amendments
will better enable firms to prevent the financial exploitation of
vulnerable Americans.
---------------------------------------------------------------------------
\51\ See CAI, Cambridge, Commonwealth, Edward Jones, Fidelity,
FSI, IRI, Miami Investor Rights Clinic, MMLIS, NAPSA, Norcross,
Philadelphia Financial Exploitation Task Force, SIFMA and Wells
Fargo.
---------------------------------------------------------------------------
LPL supported the proposed amendments but requested that the hold
period be further extended to allow for holds of up to 100-business
days. Regarding the hold period in Rule 2165, FINRA has tried to strike
a reasonable balance in giving member firms adequate time to
investigate and contact the relevant parties, as well as seek input
from a state regulator or agency or a court if needed, but also not
permitting an open-ended hold period in recognition of the seriousness
of placing a temporary hold. Rule 2165 would continue to permit the
temporary hold to be terminated or extended by a state regulator, state
agency or court of competent jurisdiction. In addition, if the proposed
hold period does not provide member firms adequate time to investigate
and contact the relevant parties, as well as seek input from a state
regulator or agency or a court if needed, FINRA may consider extending
the temporary hold period in future rulemaking.
Opposition to or Concerns With the Notice 20-34 Proposal
PIABA supports enhanced protections for investors but expressed
concern that member firms could misuse the proposed amendments. PIABA
recommended that FINRA require in Rule 2165 that the member firm: (1)
Update its written supervisory manuals to include training and review
transactions suspected of elder abuse; (2) include in its retained
records documentation of the firm's reasonable efforts to quickly
investigate the matter; and (3) file a report with the appropriate APS
agency and state regulator as soon as reasonably practical but no later
than seven business days from the initial hold period.
Regarding PIABA's suggested requirements, Rule 2165 currently
includes several safeguards designed to prevent misapplication of the
rule, including requiring that member firms that intend to place a hold
pursuant to Rule 2165 must: (1) Retain records related to the firm's
internal investigation; \52\ and (2) develop and document training
policies or programs reasonably designed to ensure that associated
persons comply with the requirements of the rule.\53\ FINRA also
expects member firms to comply with
[[Page 34091]]
all applicable state requirements, including reporting requirements.
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\52\ See Rule 2165(d).
\53\ See Supplementary Material .02 to Rule 2165.
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NASAA's letter acknowledges that neither FINRA nor the states have
brought disciplinary action due to misuse of Rule 2165 or any state
temporary hold laws by a member firm. However, as discussed in greater
detail below, NASAA does not support extending the temporary hold
period and expressed concern about the potential impact of a longer
hold period on customers. FINRA's responses to NASAA's detailed
concerns are included below in section C under ``Hold Period'' and
``Transactions in Securities.''
Pittsburgh Clinic does not support current Rule 2165 or the
proposed amendments because it believes that member firms could misuse
temporary holds for their financial benefit. FINRA has extensively
addressed the concerns of potential misuse above in section A under the
``Need for the Proposed Amendments.''
Pittsburgh Clinic also said that the survey of member firms should
not be relied on to assess Rule 2165 or the proposed amendments
because: (1) The survey respondents are member firms that stand to
benefit from an increase to the extension of the hold period, as well
as the rule's safe harbor provisions; (2) the survey respondents were
not required to provide any information to support their claims; and
(3) the survey respondents represent an inadequate and unrepresentative
sample size (the survey was provided to 3,516 member firms, of which
only 238 member firms responded).
FINRA engaged in extensive internal and external stakeholder
outreach during the assessment phase of the retrospective review to
assess the effectiveness and efficiency of FINRA's rules and
administrative processes that help protect senior investors from
financial exploitation. This outreach included: (1) Seeking comment in
Regulatory Notice 19-27 on several questions with respect to addressing
financial exploitation and other circumstances of financial
vulnerability for senior investors; (2) obtaining input from several
advisory committees comprising member firms of different sizes and
business models, investor protection advocates, member firms, and trade
associations; (3) obtaining the perspective of FINRA's operating
departments that administer the rules and their administration; (4)
considering FINRA examination observations and findings involving
senior issues; and (5) developing an anonymous survey that was
distributed to all member firms in the first quarter of 2020. In
addition, as part of the action phase of the retrospective review,
FINRA sought comment on the proposed amendments to Rule 2165 in
Regulatory Notice 20-34. FINRA considered the collective feedback from
the Retrospective Review Stakeholders and comments to the Notice 20-34
Proposal in assessing Rule 2165 and the proposed amendments.
The purpose of the survey distributed to all member firms was to
collect information in order to validate the feedback received and to
provide an additional opportunity for all member firms to provide their
views. There were 238 firms that responded to the survey, and the
breakdown of these firm survey respondents according to firm size, as
measured by the number of registered representatives, and the
comparison to the general population of member firms, is provided in
Table 1 below. With respect to the Pittsburgh Clinic comment letter,
FINRA notes that: (1) The membership survey is one tool frequently used
by FINRA in its outreach efforts to solicit information from its
members; (2) the response rate mentioned is a lower bound when
considering relevant member firms; and (3) the breakdown of survey
respondents by firm size is mostly representative with respect to the
full member firm population, as summarized in Table 1.
[GRAPHIC] [TIFF OMITTED] TN28JN21.000
Hold Period
The majority of commenters supported the proposed amendment to
extend a temporary hold for an additional 30 business days if the
member firm has reported the matter to a state regulator or agency or a
court of competent jurisdiction.\54\ For example, Edward Jones stated
that the firm is often able to quickly resolve matters where it
suspects financial exploitation of a senior or vulnerable investor by
engaging the customer's trusted contact person or using other tools,
but the firm has experienced situations where the current 25-day period
provided under Rule 2165 is insufficient. Edward Jones notes having
experienced this situation when working with state agencies, such as
APS, to investigate a case of suspected financial exploitation. Edward
Jones stated that some APS agencies are not adequately resourced to
quickly review these matters and yet are hesitant to request an
extension of a hold until they determine whether exploitation exists.
---------------------------------------------------------------------------
\54\ See CAI, Cambridge, Commonwealth, Edward Jones, Fidelity,
FSI, IRI, Miami Investor Rights Clinic, MMLIS, NAPSA, Norcross,
Philadelphia Financial Exploitation Task Force, SIFMA and Wells
Fargo.
---------------------------------------------------------------------------
While NAPSA and Philadelphia Financial Exploitation Task Force
previously supported a 60-business day extension in their comments to
Regulatory Notice 19-27, they supported the proposed extension of the
temporary hold period in the Notice 20-34 Proposal. NAPSA and
Philadelphia Financial Exploitation Task Force noted that the latest
data submitted to the NAMRS indicates that the average investigation
duration of all reported cases is 52.6 days. Recognizing that financial
exploitation investigations are often more complicated and time
consuming, NAPSA and Philadelphia Financial Exploitation Task Force
expressed appreciation for the additional days as a starting point,
with the ability to revisit as more data becomes available.
While acknowledging that an adequate period for review of the facts
and circumstances must be allowed,
[[Page 34092]]
Pittsburgh Clinic stated that the proposed longer hold period increases
the possibility that a member firm could misuse a hold to harm an
investor. Pittsburgh Clinic stated that the proposed hold period is too
long because customers may need the funds to pay for living expenses.
Pittsburgh Clinic also expressed concern that Rule 2165 does not
include a reporting requirement unless a member firm wants to avail
itself of the additional 30-business day extension.
NASAA believes that the current 25-business day hold period, with
the authority for state regulators or agencies or the courts to
terminate or extend, is the better approach as it provides time to
conduct the investigation and avoids unintended hardships from lengthy
delays. Moreover, NASAA supports involving state regulators or agencies
or the courts within the initial 15-business day hold period specified
in Rule 2165(b)(2).
Information gathered during the assessment phase of the
retrospective review, including discussions during exams in 2019
focusing on Rule 2165 and a survey to FINRA membership, supports the
need for additional time to conduct investigations and resolve matters.
NAPSA--representing APS programs which play a critical role in
investigating suspicions of financial exploitation--also expressed the
need for additional time to conduct investigations. NAPSA's data that
the average investigation duration of reported matters to the NAMRS is
52.6 days also highlights the need for a longer period to conduct
investigations and resolve matters.
Retrospective Review Stakeholders and comments to the Notice 20-34
Proposal indicated that some matters can be quickly resolved after
placing a temporary hold (e.g., by explaining to the customer that the
activity and requested disbursement fits a commonly known scam).
However, complex matters that involve investigations by state
regulators or agencies or legal actions in a court (e.g., financial
exploitation of an elderly customer by a family member or caregiver)
may need additional time to resolve. These complex matters often
involve information gathering and sharing by the firm and the state
agency or regulatory investigating the matter.
To provide member firms with additional time to resolve matters and
for APS agencies, state regulators and law enforcement to conduct
thorough investigations, FINRA is proposing amending Rule 2165 to
permit extending a temporary hold for an additional 30 business days if
the member firm has reported the matter to a state agency or a court of
competent jurisdiction. Extending the hold period as proposed is
intended to address the complex matters that need additional time to
resolve. In addition, some states mandate reporting of suspected
financial exploitation by financial institutions, including broker-
dealers, within a specified period of time. FINRA expects member firms
to comply with all applicable state requirements, including reporting
requirements.
In addition, FINRA agrees with the commenters who stressed the need
for a temporary hold not to interfere with non-suspicious disbursements
that are needed for the customer's expenses. A temporary hold pursuant
to Rule 2165 may be placed only on the suspicious disbursement (or
transaction if the proposed amendment to extend the rule to
transactions is adopted). A temporary hold may not be placed on non-
suspicious disbursements or transactions (e.g., a regular mortgage
payment).
Commonwealth supported the proposed extension of the temporary hold
period and stated that there should be some additional remedy when a
matter is not resolved at the end of the hold period. As previously
addressed in the rule filing to adopt Rule 2165, if a member firm is
unable to resolve an issue due to circumstances beyond its control,
there may be circumstances in which a member firm may extend a
temporary hold after the period provided under the safe harbor.\55\
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\55\ See File No. SR-FINRA-2016-039.
---------------------------------------------------------------------------
NAPSA and the Philadelphia Financial Exploitation Task Force
requested clarification on whether ``a state regulator or agency of
competent jurisdiction'' would include state or local law enforcement.
For purposes of Rule 2165, FINRA would interpret state or local law
enforcement to be ``a state regulator or agency of competent
jurisdiction'' and, accordingly, state or local law enforcement may
terminate or extend a temporary hold pursuant to Rule 2165.
SIFMA noted that, depending on the jurisdiction, APS may be a state
or local agency and suggested revising proposed Rule 2165(b)(4) to
refer to a ``state regulator, or an agency of competent jurisdiction''
to more clearly cover local APS. The inclusion of ``a state regulator
or agency of competent jurisdiction'' in proposed Rule 2165(b)(4) is
consistent with the language in current Rule 2165(b)(2) and (3). For
purposes of Rule 2165, FINRA would interpret state or local APS to be
``a state regulator or agency of competent jurisdiction'' and,
accordingly, state or local APS may terminate or extend a temporary
hold pursuant to Rule 2165.
Transactions in Securities
The majority of commenters supported the proposed amendment to
permit member firms to place a temporary hold on a securities
transactions where there is a reasonable belief of financial
exploitation.\56\ For example, NAPSA and the Philadelphia Financial
Exploitation Task Force applauded the creation of a uniform national
standard for placing holds on transactions related to suspected
financial exploitation. Miami Investor Rights Clinic stated that
substantial damage can result from securities transactions due to
financial exploitation and that appropriate policies, procedures, and
training can minimize any misapplication Rule 2165. Edward Jones stated
that the financial harm resulting from exploitative transactions can
take many forms, including selling long-held investments with low cost
basis resulting in a significant tax liability, the sale of fixed
income investments with yields more attractive than current rates, and
the sale of variable annuities, which could lead to surrender charges.
Edward Jones stated that the perpetrator of the exploitation could also
utilize the proceeds of these sales to invest in high-risk securities
further jeopardizing the financial security of the senior or vulnerable
investor. Edward Jones stated that when balanced against the potential
financial devastation to the senior or vulnerable investor, the
proposal is a natural extension of the current rule that will further
minimize the risk of financial harm and provide greater protection for
senior and vulnerable investors.
---------------------------------------------------------------------------
\56\ See CAI, Cambridge, Commonwealth, Edward Jones, Fidelity,
FSI, IRI, LPL, Miami Investor Rights Clinic, MMLIS, NAPSA, Norcross,
Philadelphia Financial Exploitation Task Force, SIFMA and Wells
Fargo.
---------------------------------------------------------------------------
In its comment to Regulatory Notice 19-27, PIABA cautioned FINRA
against substantive changes to Rule 2165 that might conflict with state
laws. However, PIABA noted that the recently adopted state laws allow
for holds on securities transactions and disbursements. Pittsburgh
Clinic expressed concern that the proposed extension gives too much
authority to member firms with limited oversight and that the customer
may bear the risk of loss if firm makes the wrong call in placing a
hold.
NASAA stated that if FINRA extends Rule 2165 to permit placing
holds on securities transactions, the supervision and documentation
requirements under
[[Page 34093]]
Rule 2165(c)-(d), and the training specified in Supplementary Material
.02 to Rule 2165, should be enhanced to require a documented rationale
stating why the customer's financial professional and the member firm
believe that a transaction hold will protect the customer whereas a
disbursement hold would not. NASAA stated that documentation should be
reviewed as a part of FINRA examinations. NASAA believes that
disbursement holds should be the default and that a transaction hold
should be utilized only where a disbursement hold cannot adequately
protect a customer. Furthermore, NASAA supports member firms
establishing policies and procedures to address any harm that may
result to the customer from a transaction hold.
FINRA recognizes that placing a temporary hold on a transaction is
a serious step for a member and the affected customer. Requiring that a
member firm make a disbursement hold the default and use transaction
holds only where a disbursement hold cannot adequately protect the
customer would add complexity and uncertainty into the decision to
place a temporary hold as the member firm would be required to weigh
the consequences to the customer of placing the hold at different
stages. Moreover, placing a temporary hold on the underlying
transaction may prevent significant negative financial consequences for
the customer. These negative financial consequences can result even if
a temporary hold is placed on any related disbursement of funds out of
the customer's account.
Importantly, the ability to place a hold on a transaction pursuant
to Rule 2165 would apply only if the firm had a reasonable belief that
the customer was being financially exploited. As noted above, FINRA
would pursue disciplinary action against a firm that uses Rule 2165 for
inappropriate purposes. As discussed in Regulatory Notice 20-34 and
NASAA's comment letter to Regulatory Notice 20-34, neither FINRA nor
the states have brought an action against a member firm for misuse of a
temporary hold to address suspected financial exploitation.
Some member firms already place holds on securities transactions
pursuant to state law. As noted in section A of this filing, currently,
20 states (with approximately half of the U.S. population) have enacted
laws permitting investment advisers and broker-dealers to place
temporary holds on disbursements and transactions. Amending Rule 2165
as proposed would create the first uniform national standard for
placing holds on transactions related to suspected financial
exploitation. Moreover, extending Rule 2165 to transactions would allow
for consistent, national safeguards to avoid misapplication of
temporary holds.
NASAA also noted that the NASAA Model Act is limited to
disbursements, in part, because a delay in a securities transaction
could be deemed inconsistent with best execution requirements.
Regarding whether the best execution obligation applies to a member
firm's decision to place a temporary hold on a securities transaction
where there is a reasonable belief of customer financial exploitation,
``[b]roker-dealers are reminded that nothing under the federal
securities laws or FINRA rules obligates them to accept an order where
they believe that the associated compliance or legal risks are
unacceptable.'' \57\
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\57\ See SEC Staff Bulletin: Risks Associated with Omnibus
Accounts Transacting in Low-Priced Securities (Nov. 12, 2020),
available at https://www.sec.gov/tm/risks-omnibus-accounts-transacting-low-priced-securities (SEC Staff Bulletin). The SEC
Staff Bulletin provides that, where the broker-dealer determines
that the risks cannot be appropriately managed, and particularly in
the context of low-priced securities transactions, a broker-dealer
should consider, among other things, restricting or rejecting
transactions effected on behalf of the customers of a foreign
financial institution.
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Mandatory Holds
Miami Investor Rights Clinic noted that Rule 2165 is a safe harbor
and that FINRA should consider amendments to Rule 2165 requiring that
member firms place temporary holds. FINRA believes that a member firm
using its discretion to place a temporary hold allows for the judicious
use of temporary holds to protect customers from financial
exploitation.
Cognitive Decline or Diminished Capacity
Some commenters supported extending Rule 2165 to situations where a
firm has a reasonable belief that the customer has an impairment, such
as diminished capacity, that renders the individual unable to protect
his or her own interests, even though there is no evidence of financial
exploitation.\58\ Some Retrospective Review Stakeholders also supported
extending Rule 2165 to these situations. However, other Retrospective
Review Stakeholders expressed concerns that member firms are not well-
positioned to determine if a customer is suffering from cognitive
decline or diminished capacity in the absence of suspected financial
exploitation. In addition, in comments to Regulatory Notice 19-27, the
Cornell Clinic, NASAA, PIABA and Pittsburgh Clinic expressed concerns
that such an extension would give member firms too much discretion or
would unfairly impede customer autonomy.
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\58\ See Miami Investor Rights Clinic, NAPSA, Philadelphia
Financial Exploitation Task Force and Wells Fargo.
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FINRA has not proposed to extend Rule 2165 to situations where a
member firm has a reasonable belief that the customer has cognitive
decline or diminished capacity but there is no evidence of financial
exploitation due to the concerns expressed that such an extension would
give member firms too much discretion or would unfairly impede customer
autonomy. Rather than rulemaking, FINRA summarized the information
obtained about member firms' procedures and practices in this area in
Regulatory Notice 20-34 to assist other member firms and investors.
Trusted Contact Person
Where a customer has not named a trusted contact person, Wells
Fargo suggested that FINRA give member firms the flexibility to contact
a person ``reasonably associated'' with the customer's account.
Under Rule 2165 as originally proposed in Regulatory Notice 15-37
(October 2015) (Notice 15-37 Proposal), if the trusted contact person
was unavailable, a member firm placing a hold would have been required
to contact an immediate family member, unless the member reasonably
believed that the immediate family member was financially exploiting
the customer. Commenters to the Notice 15-37 Proposal expressed
concerns that the proposed requirement would impinge upon customer
privacy and would be operationally challenging for member firms in
identifying the customer's immediate family members. Due to these
concerns, FINRA removed the requirements in the Notice 15-37 Proposal
with respect to notifying an immediate family member when a temporary
hold is placed. In the rule filing to adopt Rule 2165, FINRA noted that
Rule 2165 would not preclude a member firm from contacting an immediate
family member or any other person if the member has customer consent to
do so and that contacting such persons may be useful to member firms in
administering customer accounts.\59\
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\59\ See File No. SR-FINRA-2016-039.
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NAPSA and the Philadelphia Financial Exploitation Task Force
recommended that FINRA pursue efforts to promote use of trusted contact
[[Page 34094]]
persons by customers. FINRA has taken steps to encourage customers to
name trusted contact persons. For example, the SEC's Office of Investor
Education and Advocacy and FINRA collaborated on an Investor Bulletin
that helps customers understand the purpose of designating a trusted
contact person for brokerage accounts, and encourages customers to
designate a trusted contact person.\60\ In addition, in April 2018,
FINRA published a similar article providing information on the trusted
contact person-related amendments to Rule 4512 and Rule 2165 for
investors and member firms.\61\ FINRA and the FINRA Investor Education
Foundation have highlighted these articles on FINRA-managed social
media channels, including Facebook and Twitter, and staff regularly
discuss the benefits of designating a trusted contact when speaking
with individual investors.
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\60\ The Investor Bulletin was published in March 2020 and is
available on the SEC's website at https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-trusted-contact and on FINRA's website
at https://www.finra.org/investors/insights/consider-adding-trusted-contact-to-your-account.
\61\ FINRA made a downloadable print version of the article
available at https://www.finra.org/sites/default/files/Protecting-Seniors-From-Financial-Exploitation_0.pdf.
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Reporting Requirements
Several commenters expressed concern that Rule 2165's safe harbor
does not extend to complaints reportable on Forms U4 (Uniform
Application for Securities Industry Registration or Transfer) or U5
(Uniform Termination Notice for Securities Industry Registration), or
pursuant to Rule 4530 about an associated person whose actions were
within the safe harbor and stated that some member firms and associated
persons may choose not to place a hold pursuant to Rule 2165 because of
concerns about a possible customer complaint.\62\ These commenters
requested guidance on when a Rule 2165-related complaint would be
reportable and supported developing a specific problem code for
reporting any Rule 2165-related complaint to FINRA pursuant to FINRA
Rule 4530. FSI suggested that FINRA consider additional protections for
financial professionals so they can confidently act when there is
possible exploitation that could have long-term negative consequences
on a client's financial future and overall well-being.
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\62\ See Cambridge, FSI and SIFMA.
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As discussed in Regulatory Notice 20-34, to date, based on FINRA's
review of reported complaints, member firms have not reported a
complaint on Forms U4 or U5 or pursuant to Rule 4530 related to placing
a temporary hold pursuant to Rule 2165. Moreover, survey respondents
indicated that they had not reported a complaint on Form U4 or Form U5
or pursuant to Rule 4530 related to placing any temporary holds.
FINRA does not currently plan to propose guidance regarding when a
Rule 2165-related complaint would be reportable or develop a specific
problem code for reporting any Rule 2165-related complaint to FINRA
pursuant to FINRA Rule 4530. In considering whether a complaint is
reportable, member firms should use the existing publicly available
guidance. FINRA may reconsider this issue or develop a specified
problem code for reporting any Rule 2165-related complaint to FINRA
pursuant to FINRA Rule 4530 if complaints are reported in the future
and they appear to have a detrimental impact on the protection of
seniors and other vulnerable adults.
Customer Actions
Cambridge supported extending the safe harbor provided by Rule 2165
to protecting member firms and registered representatives from customer
actions as a result of steps taken by a member firm pursuant to Rule
2165. FINRA previously addressed this issue when adopting Rule 2165,
noting that member firms today make judgments with regard to making or
withholding disbursements and already face litigation risks with
respect to these decisions.\63\ Rule 2165 is designed to provide
regulatory relief to member firms by providing a safe harbor from FINRA
rules for a determination to place a hold. Some states may separately
provide immunity to member firms under state law.
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\63\ See File No. SR-FINRA-2016-039.
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Scope of Rule 2165
Because some state temporary hold laws cover customers younger than
65 years of age, LPL suggested that FINRA amend the definition of
``specified adult'' in Rule 2165(a)(1) to include persons 60 years of
age and older. In adopting Rule 2165, FINRA solicited feedback
regarding whether the ages used in the definition of ``specified
adult'' in proposed Rule 2165 should be modified or eliminated. As
discussed in the rule filing proposing Rule 2165, some commenters
suggested including an age lower than 65 and some commenters suggested
including an age over 65 in the definition.\64\ The inclusion of
persons 65 and older in the definition reflects, in part, that federal
agencies, FINRA and NASAA have focused on persons age 65 and older for
various senior initiatives. In addition, the definition of ``specified
adult'' in Rule 2165(a)(1) also includes persons age 18 and older who
the member reasonably believes has a mental or physical impairment that
renders the individual unable to protect his or her own interests.
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\64\ See File No. SR-FINRA-2016-039.
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Manabat stated that FINRA rules protecting senior investors should
apply to non-U.S. investors. For clarity, FINRA rules apply to U.S. and
non-U.S. customers of member firms.
NAPSA and the Philadelphia Financial Exploitation Task Force
recommended that investment companies, such as mutual funds, be
permitted to place temporary holds. In 2018, staff in the SEC's
Division of Investment Management issued a no-action letter to the
Investment Company Institute stating that the staff would not recommend
enforcement action if, consistent with the conditions in the letter, a
transfer agent, acting on behalf of a mutual fund, temporarily delayed
for more than seven days the disbursement of redemption proceeds from
the mutual fund account of a specified adult held directly with the
transfer agent based on a reasonable belief that financial exploitation
of the specified adult has occurred, is occurring, has been attempted,
or will be attempted.\65\ The no-action letter permits mutual fund
transfer agents to protect specified adult shareholders from financial
exploitation to the same extent that broker-dealers may do so currently
under FINRA Rule 2165.
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\65\ See Investment Company Institute, SEC No-Action Letter
(June 1, 2018).
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If a member firm places a temporary hold, Rule 2165 requires the
member to immediately initiate an internal review of the facts and
circumstances that caused the member to reasonably believe that
financial exploitation of the specified adult has occurred, is
occurring, has been attempted or will be attempted. FSI recommended
that FINRA provide additional guidance to member firms on conducting
these internal reviews. FSI stated that state regulators and agencies
have the appropriate expertise to conduct these types of investigations
and member firms work cooperatively to provide state regulators and
agencies with requested information. FSI stated that member firms have
access to internal records that evidence the customer's regular trading
and account disbursement activity, but firms do not want to, for
example, front-run and jeopardize a criminal investigation by trying to
contact and interview witnesses.
[[Page 34095]]
As stated in the rule filing proposing the adoption of Rule 2165,
FINRA believes that the appropriate internal review will depend on the
facts and circumstances of the situation.\66\ Member firms have
discretion in conducting a reasonable internal review under proposed
Rule 2165. In addition, Rule 2165 gives member firms flexibility
regarding notifying some parties when the member firm reasonably
suspects that the party is involved in the financial exploitation.
Specifically, Rule 2165(b)(1)(B)(i)-(ii) provides that a member firm is
not required to provide notification of a temporary hold to a party
authorized to transact business on the account or the trusted contact
person if the member firm reasonably suspects that the authorized party
or trusted contact person, respectively, may be engaged in the
financial exploitation of the specified adult.
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\66\ See File No. SR-FINRA-2016-039.
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If Rule 2165 is extended to allow for temporary holds on
transactions in securities, FSI suggested that FINRA expand the
application of the safe harbor provided by Rule 2165 to cover both
FINRA Rule 3260 (Discretionary Accounts) and FINRA Rule 5310.01
(Execution of Marketable Customer Orders).
Rule 3260's scope and purpose are distinguishable from permitting a
member firm to place a temporary hold on a transaction when there is a
reasonable belief that the customer is being financially exploited.
Rules 3260 addresses the creation and maintenance of discretionary
accounts and requires firms to have procedures to identify and prevent
excessive trading or ``churning'' in such accounts. Rule 3260 is
intended to protect customers from the misuse of discretionary power by
firms and associated persons.
In considering whether Rule 2165's safe harbor needs to be extended
to address rules relating to order execution, ``[b]roker-dealers are
reminded that nothing under the federal securities laws or FINRA rules
obligates them to accept an order where they believe that the
associated compliance or legal risks are unacceptable.'' \67\
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\67\ See SEC Staff Bulletin.
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Outreach and Collaboration
CAI requested that FINRA coordinate with state authorities and SEC
on measures to address financial exploitation. FINRA has and will
continue to prioritize senior investors and address financial
exploitation of senior investors, including through:
Carrying out a multi-faceted investor protection campaign
through the FINRA Foundation aimed at promoting awareness about, and
support for, the prevention of financial fraud and exploitation, while
simultaneously empowering financial consumers to protect themselves and
their loved ones, using tactics including:
[cir] Training law enforcement and victim advocates to detect,
investigate, and assist consumers with concerns of financial fraud and
exploitation in collaboration with federal and state securities
regulators, APS groups, NAPSA, the National Center for Victims of
Crime, the National White Collar Crime Center, and staff from FINRA's
National Cause and Financial Crimes Detection Programs;
[cir] Engaging in consumer outreach--often in coordination with the
SEC, CFPB, state securities regulators, and nonprofits such as AARP and
Better Business Bureaus--to empower financial consumers to spot, avoid,
and report financial fraud;
[cir] Conducting, supporting, and disseminating research focused on
financial exploitation and fraud as well as aging and financial
decision-making, which is shared with internal and external
stakeholders; \68\
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\68\ See FINRA Investor Education Foundation Investor Protection
Campaign Research, available at www.finrafoundation.org/fraudresearch.
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[cir] Collaborating with Committees and Task Forces focused on
issues of financial fraud and exploitation, including working with the
Department of Justice's Elder Justice Initiative, serving on NAPSA's
Financial Exploitation Advisory Board, serving on NASAA's Senior Issues
and Diminished Capacity Committee Advisory Council, participating on
various multi-disciplinary teams (MDTs) aimed at protecting and
assisting vulnerable adults, and holding joint trainings with the
CFPB's Office of Older Americans, and meeting periodically with state
securities regulators and states' attorneys general to discuss senior
investor protection issues; \69\
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\69\ See Protecting Senior Investors 2015-2020: An Update on the
FINRA Securities Helpline for Seniors, Other FINRA Initiatives and
Member Firm Practices (Apr. 2020).
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Issuing alerts and articles that educate investors about
important issues and highlighting risks facing senior investors; \70\
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\70\ See, e.g., articles such as Protecting Seniors from
Financial Exploitation and Don't Give in to Power of Attorney
Pressure; Investor Alerts such as Power of Attorney and Your
Investments-10 Tips, Plan for Transition: What You Should Know About
the Transfer of Brokerage Account Assets on Death, and Seniors
Beware: What You Should Know About Life Settlements; and FINRA's
Retirement web page for investors.
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Launching the dedicated FINRA Securities Helpline for
Seniors[supreg]--available at (844) 57-HELPS--to provide senior
investors and their family members with a supportive place to get
assistance from specially trained FINRA staff related to concerns they
have with their brokerage accounts and investments;
Collaborating with NASAA and the SEC to address senior
investor protection, including issuing a Senior Safe Act Fact Sheet
designed to raise awareness among member firms, investment advisers and
transfer agents about the Act and its immunity provisions; \71\
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\71\ See http://www.finra.org/sites/default/files/senior_safe_act_factsheet.pdf.
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Producing and presenting on in-person and virtual panels
addressing senior investor protection with the SEC, state securities
regulators, NASAA, APS offices, NAPSA, FBI and other agencies; and
Meeting with adult protective services staff in multiple
states, in part through NAPSA, to increase coordination of senior
investor protection efforts and highlight FINRA Rule 2165's provision
that APS can direct a member firm to terminate or extend a temporary
hold authorized by the Rule.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2021-016 on the subject line.
[[Page 34096]]
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2021-016. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
FINRA-2021-016 and should be submitted on or before July 19, 2021.
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\72\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\72\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13653 Filed 6-25-21; 8:45 am]
BILLING CODE 8011-01-P