NASAA Encourages Senior Investor Protection

Steven Lofchie Commentary by Steven Lofchie

The North American Securities Administrators Association ("NASAA") published a study of practices and procedures used by broker-dealers applicable to senior investors. The study (i) included the results of a survey on the various mechanisms that broker-dealers have in place to protect senior clients from financial abuse, and (ii) provided guidance on how firms can improve these procedures.

The NASAA Investment Products and Services Project Group (the "Group") conducted the study by collecting information from randomly selected firms regarding elder abuse procedures, training and reporting policies.

The findings include:

  • 94% of firms had formal processes for internally reporting elder financial abuse;

  • 54% of firms did not have policies that defined "senior customers" formally;

  • 30% of firms had "senior-specific policies and procedures";

  • 41% of firms provided forms on which customers could designate their emergency contact persons; and

  • firms were more likely to report instances of elder abuse to adult protective services than to law enforcement or regulators.

NASAA asserted that firms should prioritize the protection of senior investors. NASAA recommended that firms focus on the following areas when considering improvements to their existing policies: (i) improving training measures for identifying and addressing senior-related issues, (ii) implementing clear definitions of "seniors" and "vulnerable adults," and (iii) developing trusted contacts for senior investors. The list also included suggestions concerning heightened vigilance and protective measures for senior investors.

Commentary

Given the increasing degree of regulatory focus on this area, and the real possibility that regulators and arbitrators may expect firms to have "best practices" in place that go beyond strict legal requirements, firms should develop their compliance procedures as to the treatment of senior citizens. These procedures need not be the same as those put forward by NASAA, but they should reflect each firm's consideration as to what is right for its business.

Premium Content

Available only to Premium subscribers.

 

Tags