SEC and FINRA Report on National Senior Investor Initiative

By Patricia Uceda, Spring 2015 Graduate Research Assistant

As we’ve discussed, senior investors are highly susceptible to investment fraud due to their accumulated wealth and the fact that some may suffer from diminished capacity. This issue is of growing concern to securities regulators given that approximately 10,000 Americans will turn 65 every day for the next 15 years.

To help broker-dealers become better equipped to deal with the particularized issues facing senior investors, the SEC and FINRA recently issued a highly detailed report which discusses good policies and procedures broker-dealers should follow when dealing with senior investors.

Specifically, FINRA and the SEC are concerned that broker-dealers may be recommending unsuitable products that are far too risky for senior investors.  They are particularly concerned that the risks might not be adequately disclosed to the investors.  Seniors have less time to recover from an investment loss, so this is a very important issue – protecting undue harm.

The report seeks to combat this danger by examining the types of securities purchased by senior investors, the suitability of recommended investments, the training of firm representatives, marketing, communications, use of designations such as “senior specialist,” account documentation, disclosures, customer complaints, and supervision. To read the full report, go here.