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State Securities Regulators Propose Model Act to Protect Vulnerable Adults from Financial Exploitation

On September 29, 2015, the North American Securities Administrators Association (NASAA) released for public comment a proposed model to help broker-dealers, investment firms, and employees to better recognize if a senior or other vulnerable adult is being financially exploited.

Judith Shaw, the NASAA President and Maine Securities Administrator, said, “Working together we can and will close the holes in our safety net of support and protection for vulnerable adult investors.”

The model entitled “An Act to Protect Vulnerable Adults from Financial Exploitation” has four key objectives:

  1. Require qualified employees of broker-dealers and investment advisors who reasonably believe that someone has been exploited to promptly notify Adult Protective Services (APS) and their state securities regulator, as well as a third party designated by the vulnerable adult as long as the party is not suspected of be participation in the exploitation.
  2. Allow delay of disbursements from an account of a vulnerable adult if financial exploitation is suspected.
  3. Allow qualified employees—any agent, investment adviser representative or person who serves in a supervisory, compliance, or legal capacity for a broker-dealer or investment advisor—to provide relevant records regarding suspected or attempted financial exploitation to relevant authorities.
  4. Provide immunity from administrative or civil liability for broker-dealers and investment advisors for taking actions permitted under the act.

This act applies to individuals 60 and older as well as people protected under APS.