Alabama was one of the first states to enact legislation requiring certain financial institutions to report suspected financial exploitation of senior and other vulnerable investors. Other states have since followed suit, and recent efforts by the Financial Industry Regulatory Authority (FINRA) and Congress to protect senior investors indicate that these issues will remain in the spotlight as the senior population continues to grow. Alabama broker-dealers and investment advisers should ensure they are in compliance with the law and monitor continuing developments in this area.
The Protection of Vulnerable Adults from Financial Exploitation Act
Drafted by the Alabama Securities Commission (ASC), the Protection of Vulnerable Adults from Financial Exploitation Act went into effect in July 2016. Its goal is the protection of “vulnerable adults,” defined to include persons 65 years of age or older and persons over 18 years old who are senile, have intellectual or developmental disabilities, or are mentally or physically incapable of adequately caring for themselves — in short, individuals who are most susceptible to financial abuse.
The Act applies to broker-dealer and investment adviser firms, as well as their agents, investment adviser representatives and persons serving in a supervisory, compliance, legal or associated member capacity. Banks are not subject to the Act.
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