FINRA Proposes Rule to Withhold Disbursements to Seniors
FINRA approved rulemaking to protect senior investors by allowing firms to place a hold on fund and securities disbursements. The proposal would also require firms to make reasonable efforts to obtain a trusted contact person. FINRA would allow firms to put a temporary hold on disbursements for accounts of investors aged 65 or older “where there is a reasonable belief of financial exploitation.”
OUR TAKE: We cannot argue with the desire to protect seniors, but we question the potential unintended consequences of FINRA’s paternalism. This rule may make it more difficult for very competent seniors to access their own funds, especially if they have the misfortune of working with unscrupulous operators who use this rule as a pretense to prevent withdrawals. It also may make it more difficult for children of incompetent seniors to manage their affairs.