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Regulatory Sanctions

Elder Financial Abuse (Part I): First Came the 'Free Lunch Sales Seminars'

May 30, 2018

by Howard Haykin


Wikipedia describes ‘Elder Abuse’ as “a single or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust, which causes harm or distress to an older person.”


Once upon a time, “free lunch” sales seminars hosted by unscrupulous brokers seemed like the biggest risk confronting senior investors. Federal, state and industry regulators were so concerned that, in September 2007, they jointly published “Protecting Senior Investors: Report of Examinations Of Securities Firms Providing ‘Free Lunch’ Sales Seminars" – a 46-page report from OCIE (SEC’s Office of Compliance Inspections and Examinations), NAASA (North American Securities Administrators), and FINRA (Financial Industry Regulatory Authority).


More recently - over the past 6 months - financial exploitation of senior investors - a/k/a elder abuse - has come in 'other flavors', as reported in FINRA's disciplinary actions against at least 17 brokers. And, over the next several days, Financialish will post a series of articles addressing the numerous ways senior investors have been abused or exploited – referring largely to FINRA's disciplinary actions - i.e., AWC Letters.


Yet, beyond publishing reports and disciplinary acitons, what are some of the things that the SEC and FINRA doing today to combat elder abuse in the financial markets?


At SEC.GOV, …  



  • 'Protecting Seniors from Financial Exploitation'. (Investor Alert, 4/25/18)
  • 'RegNote 17-11: SEC Approves FINRA Rules Relating to Financial Exploitation of Seniors'.  FINRA adopted new Rule 2165 (Financial Exploitation of Specified Adults)  to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; FINRA amended Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. The rule changes became effective 2/5/18.

►  New Account App All Sections PDF Template SHORT- 2165- 4512

►  New Account App All Sections PDF Template LONG- 2165- 4512



For related articles, click on …

Elder Financial Abuse (Part 2): FINRA Case Studies

Elder Financial Abuse (Part 3): FINRA Case Studies

Elder Financial Abuse (Part 4): FINRA Case Studies

Profiling Brokers Who Might Prey on Senior Investors