13.2.2.3. Financial Exploitation of Vulnerable Adults
Suppose you have an elderly or disabled customer who begins making decisions that don’t appear to be in his best interest. Maybe you suspect someone is taking advantage of the customer. If the trades appear to be legally authorized by the customer, is there anything you can do about your suspicions?
Yes. FINRA allows a member firm to put a temporary hold on transactions and the disbursement of funds or securities from an account if it suspects that an elderly or disabled customer is being exploited. FINRA calls this category of customers specified adults. This type of temporary hold can be placed on an account if the following conditions are met:
• One of the individuals authorized to transact business on the account is a specified adult, defined as:
◊ At least 65 years of age
◊ At least 18 years of age and has a mental or physical condition that keeps him from protecting his own interests
• The member firm has a reasonable belief that the specified adult may be the victim of financial exploitation
If the reasonable belief only applies to certain transactions (as opposed to all activity on the account), only those transactions should be blocked. Other account activity should continue to be allowed.
The member firm does not need definite knowledge of a specific, diagnosed disability, or any other kind of detailed medical information about the customer. The condition doesn’t even have to be permanent. A customer temporarily hospitalized for surgery could fit the definition if staff persons who regularly deal with the customer have a reasonable belief that the