A Step Forward in Safeguarding Seniors Against Financial Exploitation

A Step Forward in Safeguarding Seniors Against Financial Exploitation

The financial exploitation of seniors and other vulnerable adults has become a widespread issue today. And with more members of the baby boomer population reaching retirement each day, the rampant abuse of this population could continue on for some time. Sadly, it is estimated the majority of financial elder abuse cases are perpetrated by family members or other close friends. These crimes are not always obvious: larger, more blatant theft of funds might be averted, but obscure influence on small transfers, gifting to non-existent charities, or telemarketing scams are generally more difficult to sleuth out. Gone are the days of grammatically incorrect written requests to transfer funds to an account in an underdeveloped country. Today, fraudsters are more strategic in their approach, and investors such as seniors and adults with physical or mental impairment are the most vulnerable.

To combat this growing issue, the Securities and Exchange Commission (SEC) approved two FINRA rule changes which took effect earlier this year. As a bit of background, FINRA, or the Financial Industry Regulatory Authority, is a self-regulating organization that oversees brokerage firms and exchange markets, with the SEC acting as the ultimate regulator over the securities industry as a whole. Sand Hill is directly regulated by the SEC, but we custody client assets at third party brokerage firms who are subject to FINRA rules.

The first rule allows brokerage firms to ask clients to provide a trusted contact in the event the client is unavailable or incapacitated in some way. The second rule allows brokerage firms to place a 15 day hold on fund disbursements if abuse or fraud is suspected. With this rule, brokerage firms now have the ability to hold any transfer request until the previously named trusted person is contacted so they can check on the client directly. These rule changes apply to senior investors, defined as age 65 and older, as well as vulnerable adults over the age of 18 who suffer from physical or mental incapacity.

For Sand Hill clients, these rule changes have minimal impact as we already utilize more stringent processes surrounding the movement of funds, including the verification of any and all third-party transfer requests. We request the name and contact information of trusted persons – not just family members but also their professional team of attorneys and tax advisors – whom we interact with on a regular basis. Importantly, the Sand Hill team prides itself on truly knowing our clients, far more than just names and signatures. Therefore, we see these FINRA rule changes as a step forward in the securities industry. For the millions of investors who have accounts directly with brokerage firms, these rules are an upgrade. For Sand Hill clients, we will continue our existing rigorous best practices to protect clients from all forms of financial exploitation.

Sand Hill is always looking out for the best interests of all clients, no matter their age or vulnerabilities. To this end, we have taken significant steps to protect our client’s information from fraudsters, which you can read more about in our blog post Enhanced Security for Your Sand Hill Accounts. If you suspect any breach of your information security or identity, please notify your Sand Hill team so we can take immediate action to address the concern.

 

Sources: Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC)

Articles and Commentary

Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.


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