FINRA has formally asked the Securities and Exchange Commission to approve a new anti-fraud rule that would let brokerage firms delay a suspicious transaction or withdrawal for up to 10 business days – double the five-day window the regulator floated just months earlier.
The latest proposal centers on the new FINRA Rule 2166, which would give member firms a safe harbor to freeze a disbursement or trade whenever they have a reasonable belief that fraud is underway. Unlike FINRA's existing senior-investor protections, the new rule would apply to any customer 18 or older, reflecting the regulator's view that scams increasingly cut across age groups.
FINRA first outlined the plan in January through Regulatory Notice 26-02, which proposed a five-business-day "speed bump" alongside other changes to protect at-risk clients. The months-long comment period drew responses from large broker-dealers, industry trade groups, law schools and investor advocates before closing March 9.
Firms and advocacy groups alike pushed for a longer intervention window. FINRA's rule filing itself notes that a 10-business-day period would give firms a "greater ability to collect information, investigate, reach the customer, and possibly schedule in-person meetings," while acknowledging the tradeoff of tying up a client's assets for longer.
In a March letter responding to the January notice, ASA President and CEO Chris Iacovella said the rules should let firms "intervene when they see red flags" without imposing "months-long freezes, account holds, or intrusive data collection" on customers who have done nothing wrong.
“Protecting America’s seniors from fraud demands a regulatory framework that empowers firms to intervene when they see red flags without forcing investors who have done everything right to endure months-long freezes, account holds, or intrusive data collection,” Iacovella said.
The filing also proposes amendments to Rule 2165, FINRA's existing framework for protecting Specified Adults – defined as anyone 65 or older, or 18 and older with a reasonable-belief impairment – from financial exploitation.
Under the current rule, a firm can hold a disbursement or transaction for an initial 15 to 25 business days, with a single 30-business-day extension once the matter has been reported to a regulator or court, for a maximum of 55 business days. FINRA's filing would add three more 30-business-day extensions, raising the ceiling to 145 business days, provided the firm keeps following up with the relevant authority, has not received a response, and continues to have a reasonable belief that exploitation is ongoing.
FINRA points to feedback from the National Adult Protective Services Association, which told the regulator that financial-exploitation investigations are often the most complex cases Adult Protective Services handles and "can take longer than a year" – well beyond the current 55-day cap.
The filing would also require firms to notify authorized parties and trusted or emergency contacts once a hold is extended past 55 days, and would let firms authorize staff in dedicated senior-investor-protection or fraud-prevention roles, not just supervisor
The push for new tools reflects a fraud problem regulators say is accelerating. FINRA's filing cites Federal Trade Commission data putting the overall cost of fraud to older Americans at approximately $81.5 billion in 2024 once underreporting is factored in, while the FBI's Internet Crime Complaint Center logged more than $7.7 billion in losses reported by Americans over 60 in 2025 alone. Criminals' growing use of artificial intelligence to impersonate family members, advisors and government officials has also made scams harder for both clients and compliance staff to catch in real time.
Citing the FINRA Investor Education Foundation's 2024 National Financial Capability Study, the filing notes that 42% of investors have named a trusted contact for their accounts, up from 38% in 2021, while just over half have not – even though nearly half of that group said they would be willing to if asked.
That gap is part of why FINRA also wants to let firms use the more familiar and arguably more urgent-sounding term "emergency contact" under proposed changes to Rule 4512, as well as apply a single designation across all of a client's accounts rather than requiring a separate form for each one.
For senior investors living on fixed incomes drawn from a lifetime of savings, FINRA said "fraud losses can be catastrophic" compared to younger investors who still have time to recoup.
"The frequently irreversible nature of these losses underscores why FINRA has placed special emphasis on protecting this vulnerable population and why member firms play such a crucial role as the first line of defense against financial exploitation," FINRA said in its filing.
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