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FINRA Warns Firms of Risks to Senior Investors Concerning Customer Trusts

At best these arrangements present potential conflicts of interest, at worst they provide the opportunity for massive financial exploitation of (often) vulnerable senior customers.
Jessica Hopper, Head of FINRA Enforcement
At best these arrangements present potential conflicts of interest, at worst they provide the opportunity for massive financial exploitation of (often) vulnerable senior customers.
Jessica Hopper, Head of FINRA Enforcement

FINRA warned firms to scrutinize broker requests "to be named a customer’s beneficiary, executor or trustee or to hold a power of attorney for a customer."

In a statement, Head of FINRA Enforcement Jessica Hopper emphasized potential risks from these arrangements ranging from conflicts of interest to opportunities for "massive" financial exploitation. She referenced a recent rule proposal that would restrict certain associated persons from acting as beneficiaries, executors, or trustees on behalf of, or for, a customer under FINRA Rule 3241 ("Registered Person Being Named a Customer's Beneficiary or Holding a Position of Trust for a Customer") (see previous coverage).

Primary Sources

  1. FINRA Press Release: Working on the Front Lines of Investor Protection – Protecting Senior Investors

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Tags

Regulated Activities
Conflicts of Interest Employee Matters Suitability and Consumer Protection
Sub-Activity
Outside Business Activities / Private Securities Transactions, Seniors
Regulated Entities
Broker-Dealers
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
FINRA / MSRB / SEC Exchanges / SIPC / Accountants
Sub-Author
FINRA