More states likely to approve senior financial abuse regulations

Jan 24, 2017 @ 4:42 pm

By Mark Schoeff Jr.

More states will approve a regulation this year designed to curb financial abuse of the elderly, the head of an organization representing state regulators predicted on Tuesday.

Last year, the North American Securities Administrators Association released a model rule that requires financial advisers to report suspected abuse to state and other authorities, allows them to stop disbursements from seniors' accounts and gives them protection from liability.

Four states — Alabama, Indiana, Louisiana and Vermont — passed laws in 2016 that followed or replicated the NASAA model rule. Three other states — Washington, Missouri and Delaware — already had regulations in place.

As states begin their 2017 legislative sessions, NASAA executive director Joseph Brady expects about six more to join the roster of those approving regulations based on the NASAA model rule.

“In the states where it gets introduced, it has a good chance of getting enacted,” Mr. Brady said on the sidelines of the Financial Services Institute annual conference in San Francisco.

On Capitol Hill on Tuesday, Sen. Susan Collins, R-Maine, re-introduced legislation that gives financial advisers civil liability protection for reporting senior financial abuse. Ms. Collins' bill was held up in the Senate last year, even though a similar measure was approved by the House.

“We believe this legislation will protect senior investors by reducing barriers for financial services professionals to report financial exploitation to state securities regulators and other appropriate governmental organizations,” FSI chief executive Dale Brown wrote in a Jan. 23 letter to Ms. Collins, who is chairwoman of the Senate Aging Committee.

While the NASAA rule and Ms. Collins' bill work their way through state and federal legislatures, a Financial Industry Regulatory Authority Inc. senior abuse rule is being reviewed by the Securities and Exchange Commission.

The similarities between the NASAA and Finra rules have added momentum to regulatory efforts to combat senior exploitation, according to Mr. Brady.

But the two measures differ in one key respect. The NASAA regulation requires reporting, while Finra's does not.

“The goal was to incentivize [reporting] and give firms safe harbor so they can take those steps,” Mr. Brady said during an FSI panel.

Senior exploitation is at the top of state regulators' priority lists because of its frequency. Scammers are targeting the retirement assets of the country's growing elderly population.

“In almost every case…a senior is a victim,” William Beatty, Washington securities director, said on the FSI panel. “Quite simply, that's where the money is.”


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