NASAA SENIOR RESOURCES
NASAA and its members have been in the forefront in detecting the problem of senior investor abuse and responding to it aggressively with innovative regulatory solutions, targeted enforcement, investor education and publication of best practices for serving senior investors.
With at least a third of its members’ enforcement actions involving senior investors, NASAA formed a Board-level committee to tackle a wide range of challenges confronting senior investors, regulators and securities industry professionals.
FINRA, NASAA and SEC OIEA Urge Investors to Establish a Trusted Contact to Increase Investor Protection
In a combined effort to provide additional protection for investors, FINRA and the North American Securities Administrators Association (NASAA) announced a new campaign on September 28, 2021 urging investors to provide their financial firms with a trusted contact. The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy (SEC OIEA) is also collaborating on this initiative.
A trusted contact is an individual authorized by an investor to be contacted by their financial firm in limited circumstances. These circumstances would include concerns about activity in the investor’s account or if the firm has been unable to reach the investor after numerous attempts. A trusted contact may be a family member, attorney, accountant or another reliable third party; investors may establish more than one trusted contact and may add or change a trusted contact at any time.
Model Acts & Rules
In January 2016, NASAA members voted to adopt the Model Act to Protect Vulnerable Adults from Financial Exploitation. The NASAA model act gives industry participants and state regulators new tools to help detect and prevent financial exploitation of vulnerable adults. The act mandates reporting to a state securities regulator and state adult protective services agency when a qualified individual has a reasonable belief that financial exploitation of an eligible adult has been attempted or has occurred. The act also authorizes disclosure to third parties only in instances where an eligible adult has previously designated the third party to whom disclosure may be made.
In March 2008, NASAA members voted to adopt the NASAA Model Rule On the Use of Senior-Specific Certifications and Professional Designations. The model rule prohibits the misleading use of senior and retiree designations, a problem first spotlighted by state securities regulators, while while also providing a means by which a securities administrator may recognize the use of certain designations conferred by an accredited organization.
Training for the Securities Industry
Addressing and Reporting Financial Exploitation of Senior and Vulnerable Adult Investors
NASAA, the SEC, and FINRA have provided this training presentation as a service to the securities industry. Firms can use this presentation to train associated persons about how to detect, prevent, and report financial exploitation of senior and vulnerable adult investors. The training serves as a resource for firms implementing the requirements of the federal “Senior Safe Act” (Section 303 of the ‘‘Economic Growth, Regulatory Relief, and Consumer Protection Act’’) and the state training requirements for certain firms and financial institutions relating to senior investor protection and set forth in Connecticut Gen. Statutes 16b.463. As of June 2021, the training satisfies state training requirements for certain firms and financial institutions relating to senior investor protection and set forth in Florida Statutes Section 517.34; Nevada NRS Sec. 90.614; New Mexico NMSA 1978, Section 58-13D-7; Puerto Rico OCFI Reg. No. 7900, Art. 3 §1; and Washington RCW 74.34.220.
Report on Industry Professionals with Diminished Capacity, July 2020
In 2020, NASAA’s Senior Issues and Diminished Capacity Committee released a report examining issues related to diminished capacity and cognitive impairment that may affect financial professionals. The report was based on a series of discussions between state and provincial securities regulators with broker-dealers, investment advisers, and compliance consultants to understand how the industry handles issues related to diminished capacity and cognitive impairment of financial professionals.
Report on Senior Practices and Procedures, June 2017
In 2016, the Investment Products & Services project group under the direction of the NASAA Broker-Dealer Section Committee conducted a survey of broker-dealer practices and procedures applicable to senior investors. NASAA greatly appreciates the cooperation of the more than 60 broker-dealers that responded to the inquiry. This report summarizes findings from the inquiry.
NASAA Guide for Developing Practices and Procedures for Protecting Senior Investors and Vulnerable Adults from Financial Exploitation, 2016
About This Guide
Having up-to-date policies and practices in place that address potential cases of diminished capacity and financial exploitation will better equip financial services professionals to: 1) recognize diminished capacity and financial exploitation; 2) understand when and how to escalate reporting of such issues within a firm; and 3) direct reports to governmental agencies that can conduct additional investigations and provide needed services.
This Guide highlights certain requirements and options available under existing state laws, NASAA’s Model Act, and voluntary practices, coupled with suggestions on how firms should develop policies and procedures to mitigate potential damage caused by senior exploitation and issues related to cognitive decline or diminished capacity. The Guide is structured around five key concepts:
- identifying vulnerable individuals
- governmental reporting
- third-party reporting
- delaying disbursements from client accounts; and
- continuing regulatory cooperation following reports or disbursement delays.
The guide focuses on steps that firms can take to identify and respond to issues that are common in working with senior investors and are likely to assist firms in utilizing the new statutory tools available to address issues related to senior financial exploitation and diminished capacity. We hope this Guide encourages financial services firms to continue to identify and implement additional practices that address the particular needs of senior investors.