Rule Change Updates

Seniors will receive increased protection from financial exploitation under new rules that were recently approved by the SEC.  Effective February 5, 2018, amendments to the existing Customer Account Information Rule, Rule 4512 and a new FINRA rule, Rule 2165, and, will help address this form of investor abuse.

Industry Impact

The two primary changes from these rules are:

  • The requirement that firms attempt to obtain the name of and contact information for a trusted contact person for a customer’s account.FINRA will amend its New Account Application Template to a provide guidance for capturing this information.
  • Permission for firms to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is suspicion of financial exploitation. Firms can then investigate the matter by reaching out to the customer, the trusted contact, and, potentially law enforcement, when financial exploitation is suspected.

For more information, see FINRA Regulatory Notice 17-11.

Series Exam Impact

The requirements from the new rule and amendment will impact all FINRA and MSRB licensing exams administered after February 5, 2018.

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