Expect Focus Life Insurance, June 2017

FINRA Moves to Protect Seniors and Other Vulnerable Persons

Financial Services Regulatory   |   FINRA Enforcement, Arbitration, and Appeals   |   Life, Annuity, and Retirement Solutions   |   June 23, 2017
Download Download   
Share Share Page

FINRA has taken another step to protect against what it calls "financial exploitation of vulnerable individuals or individuals with diminished capacity." These include seniors (at least age 65) and persons (at least age 18) with a mental or physical impairment preventing them from protecting their own interests.

Effective April 10, FINRA revised its sanction guidelines so that all disciplinary proceedings it brings are required to determine whether a firm "exercised undue influence over the customer." FINRA’s sanction guidelines do not prescribe fixed sanctions for particular violations. Instead, they list 19 potentially mitigating or aggravating factors that "should be considered in conjunction with the imposition of sanctions with respect to all violations."

Previously, FINRA decisions acknowledged that the exercise of undue influence is an aggravating circumstance "on a case-by-case basis." The revision "makes clear" that the sanction guidelines "contemplate coverage for vulnerable individuals or individuals with diminished capacity, which may include senior investors."

FINRA’s revision of its Sanction Guidelines follows recent actions to shore up FINRA rules to protect seniors and other vulnerable persons. Among other things, FINRA amended its Rule 4512 to require members to make reasonable efforts to obtain, from each customer for whom they maintain an account, specified information about a "trusted contact person." FINRA also adopted a new Rule 2165 that permits, but does not require, FINRA members to place temporary holds on disbursements from customer accounts. See "SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons," Expect Focus, Vol. I, 2017.

©2022 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.