Professionals in the securities industry are obligated to follow the rules created by the Financial Industry Regulatory Authority (FINRA), and it is important that they stay abreast of any changes or updates to them. One regulation that was recently amended is Rule 4512, which concerns customer account information.
Previously, for each account opened, a FINRA member had to get and maintain certain information, including the name and address of the customer and the names of anyone else associated with the account, plus the scope of their responsibilities. Now, members also need to make an effort to get the information of a trusted contact of the client, to assist in discovering or preventing possible financial exploitation.
What constitutes a trusted contact?
As the name suggests, a trusted contact is intended to be someone looking out for the best interests of an account holder. This could be a friend, family member, or anyone the customer chooses, as long as they are at least 18 years old. While a customer doe not need to supply any information about a trusted contact, a member now has to make a reasonable effort to obtain it. And then once a trusted contact is listed on an account, the member has authorization to reach out to this person to discuss the customer’s account in regards to potential financial exploitation.
What can a member disclose to a trusted contact?
As stipulated by Rule 4512, there are “reasonable categories” that are allowed to be disclosed to a trusted contact. If a member hasn’t been able to get in touch with a customer, for example, a trusted contact could be called to find out if the customer has new contact information.
Another topic that is important is health. Often, elderly individuals are taken advantage of when their health deteriorates and they lack the ability to consent or otherwise have reduced awareness. If a FINRA member thinks a client is suffering from a medical condition, he or she can talk to the trusted contact to learn more.
When FINRA rules aren’t enough
The goal of the changes to Rule 4512 is to add new layers of protection for older investors who may be more vulnerable to financial exploitation. Unfortunately, unscrupulous brokers and advisors are unlikely to adhere to and utilize this new protection. The positive news for investors is that additional help is available.
If you believe you were the victim of financial fraud, the Silver Law Group wants to hear from you. For years, we have been representing elderly investors and have helped numerous clients get lost money back through litigation and FINRA arbitration. To learn more information about your options and the steps involved, contact us.
You can call us toll-free at 1-800-975-4345 or send us a message through our online form. The Silver Law Group only works on contingency. Unless we successfully help you recover lost funds, you will not owe us a fee.