What Every Broker-Dealer Needs to Know about Protecting Vulnerable Investors from Financial Exploitation

Senior investors represent a disproportionate share of the nation’s wealth. An estimated 10,000 baby boomers reach the age of 65 each day, and scams by third parties preying on vulnerable investors are becoming more prevalent. Congress, state lawmakers, and FINRA have responded by implementing new laws and regulations to enable the financial industry to curtail bad conduct by third parties. To avoid adverse action by securities regulators, broker-dealers must become familiar with the new and evolving rules and maintain effective programs to safeguard vulnerable customers.

With these issues in mind, the Self-Regulatory Organizations (SRO) Subcommittee of the ABA Securities Litigation Committee recently hosted a Regulatory Forum on Senior Investor Issues in New York City. Securities regulators, in-house counsel for broker-dealers, and outside counsel provided their unique perspectives on legal developments impacting vulnerable investors and the challenge of compliance. This article gives a brief overview of new legal protections for vulnerable investors and the core pillars of a successful program to protect senior investors.

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