The Financial Industry Regulatory Authority or “FINRA,” is a private corporation that acts as a self-regulatory organization of investment brokers and investment firms. How do they help protect senior investors?
Its rules and guidance are designed to protect investors and to “ensure the integrity of today’s rapidly evolving market.”
The new FINRA Sanction Guidelines now expressly contemplate “whether the customer is age 65 or older” (senior investor) and “whether the respondent exercised undue influence over the customer and whether the customer had a mental or physical impairment that renders the person unable to protect his or her own interests”.
The National Law Review’s recent article entitled “National Adjudicatory Council Revises FINRA Sanction Guidelines” reports that FINRA Regulatory Notice 20-37 states the revised Sanction Guidelines that became effective Oct. 20, 2020.
In the revised Sanction Guidelines, FINRA and the NAC now directly discuss protecting senior investors and the issue of potential senior investor abuse. They also have revised the Sanction Guidelines to be consistent with FINRA Rule 2165 – Financial Exploitation of Specified Adults.
Further, FINRA asserts that “as with other considerations in the Sanction Guidelines, adjudicators should take a principles-based approach to assessing if the rule violations have more impact on elderly or impaired customers, including the customer’s ability to recover from sustaining financial losses.”
Moreover, FINRA states that these revisions to the Sanction Guidelines should be considered by adjudicators as only “aggravating factors” when considering an appropriate sanction for a FINRA violation.
The FINRA Sanction Guidelines don’t state specific sanctions for a particular violation. They now provide adjudicators with an additional “aggravating factor” to contemplate in determining the appropriate sanction.
The watchdog said that it was feedback from its Securities Helpline for Seniors that showed a pattern of concerns among senior citizens about brokers exploiting their financial accounts that caused them to take action “by putting in place the first uniform, national standards to protect senior investors.”
Reference: The National Law Review (Nov. 2, 2020) “National Adjudicatory Council Revises FINRA Sanction Guidelines”