FINRA puts forward new anti-elder fraud proposal

FINRA has proposed rule changes aimed at combating investment scams — particularly against senior citizens — in part by empowering broker-dealers to extend delays on suspicious transactions.

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The proposal, released Thursday, would add as much as three months to the amount of time brokerage firms can place holds on the accounts of clients 65 and older when they suspect financial exploitation. Current rules allow them to halt transactions for as long as 55 days. 

“Given the complexity of modern fraud schemes and the time required for effective investigation and intervention, FINRA believes that extending the permissible temporary hold period would provide member firms with additional time to work with customers, trusted contacts and appropriate authorities to prevent or mitigate harm,” the self-regulatory body said. 

Americans over 60 lost more than $4.8 billion to fraud in 2024, according to the Financial Industry Regulatory Authority, which said losses are likely higher than reported to authorities. Scammers employ sophisticated tactics, including artificial intelligence, to cheat people out of their money, the agency said.

Beyond the rules aimed at protecting seniors, the proposal calls for broker-dealers to be permitted to temporarily delay disbursements or transactions for any customers, regardless of age, as long as five business days when there’s a possibility of fraud. 

The new rules also would allow firms to use the term “emergency contact” instead of “trusted contact person” in client investment accounts as a way to encourage customers to include details on people to contact in case of suspicious activity.

It is seeking public comment on the new rules, setting a deadline of March 9.