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Financial Industry Issues New Rules to Protect The Elderly

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By Jennifer Rossettini, CFP®

As a follow-up to our Elder Abuse series, we are pleased to inform you of some new rules issued for the financial services industry that are aimed towards protecting the elderly from financial abuse. Specifically, the Financial Industry Regulatory Authority (FINRA), the organization that regulates the securities brokerage industry, implemented new rules that took effect on February 5, 2018. Regulatory Notice 17-11 describes these new rules as a way for its members “to respond to situations in which they have a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted, or will be attempted. Members can better protect their customers from financial exploitation if they have the ability to contact a customer’s designated trusted contact person and, when appropriate, place a temporary hold on a disbursement of funds or securities from a customer’s account.”

Under the amended FINRA Rule 4512 requires member firms to make reasonable efforts to obtain contact information for a trusted contact person who is over the age of 18 and who may be contacted about a customer’s account. Now, during the account opening process or thereafter, your financial advisor should be asking you for contact information for a trusted person and disclosing to you, in writing, that they may contact the trusted person and disclose account information to them in order to determine whether financial exploitation is going on.

Further, new FINRA Rule 2165 provides (1) that member firms must adopt and implement policies and procedures regarding elder abuse; (2) that employees of member firms must be trained about elder abuse; and (3) that member firms can temporarily refuse transactions if elder abuse is suspected.  This new rule defines a “Specified Adult” as someone who is 65 years old or older, or someone who is 18 years or older with an impairment that prevents the individual from protecting his or her own interests. The rule further defines “financial exploitation” as “(A) the wrongful or unauthorized taking, withholding, appropriation, or use of a Specified Adult’s funds or securities; or (B) any act or omission by a person, including through the use of a power of attorney, guardianship, or any other authority regarding a Specified Adult, to: (i) obtain control, through deception, intimidation or undue influence, over the Specified Adult’s money, assets, or property; or (ii) convert the Specified Adult’s money, assets or property.”

If a member firm “reasonably believes” that financial exploitation of a Specified Adult has occurred, is occurring, has been attempted or will be attempted, the firm is permitted to place a temporary hold on a disbursement of funds from the account of the Specified Adult. The member firm must then, within two business days, provide notice of the temporary hold and the reason therefore to all authorized parties on the account and the trusted contact person, unless one of those parties is the one suspected of doing the exploiting. While the temporary hold is in place, the member firm must conduct an internal review of the facts surrounding the suspicion of financial exploitation, and depending on the findings, can extend the temporary hold for an additional 10 business days.

While it remains to be seen how member firms will implement these new rules and what effect it will have on account owners, it is certainly a step in the right direction.

Kit KatAsk Kit Kat – Tiger in Captivity

Hook Law Center: Kit Kat, what can you tell us about Gustavo, a tiger, who was living in captivity in Mississippi, but now lives in Texas?

Kit Kat: Well, Gustavo is one lucky fellow! He’s 16 years old, and he was rescued just in time. We hope he survives until 20, the average age for tigers in captivity. In 2012, he was rescued from a roadside zoo in Mississippi. His owner there did not treat him well, and his diet was atrocious. This led him to have kidney issues and arthritis. He was fed on a diet of just chicken parts. Tigers need more than that—they need whole prey, which means including the bones and organs to get the nutrients they require. Now he is living at Cleveland Amory Black Beauty Ranch in Texas. He’s got plenty of room to roam and toys to chase like a large, synthetic ball.

Approximately, 5,000 tigers in the US live in poorly-run, roadside zoos or in private hands. This number is greater than the total number of tigers living in the wild across the world. Unfortunately, these untrained operators and owners don’t really know how to care for tigers, according to Nicole Paquette, Vice President of Wildlife Protection at the Humane Society of the US (HSUS). So through HSUS’s advocacy, the Big Cat Public Safety Act was introduced in the Senate this past June. It would outlaw the ability of individuals and unqualified exhibitors to house and breed big cats, like tigers. The Act has not yet been passed, but HSUS will keep advocating for it until it does pass. Big cats are so majestic and beautiful! They deserve to be protected. (“Gusto for the Good Life, All Animals, September/October 2018, p. 14)

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Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, September 7th, 2018. Filed under Senior Law News.
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