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Difficulty: EasyFinancial Exploitation of Senior Investors and Vulnerable Adults

Under FINRA Rule 2165 regarding the financial exploitation of specified adults, a temporary hold authorized by the rule permits a member firm to block trade executions within the customer's account in addition to withholding disbursements of funds or securities.

Answer: Answer

Answer

False. FINRA Rule 2165 permits member firms to place temporary holds on disbursements of funds or securities out of an account, but it does not grant legal authority under safe harbor to block or suspend trade executions within the account.
The statement is False because FINRA Rule 2165 safe harbor coverage applies strictly to temporary holds on disbursements of funds or securities out of an account. The rule does not grant member firms the authority to prevent or block securities trade executions within the account.

Step-by-Step Solution

1
Identify the primary purpose and legal scope of FINRA Rule 2165.
FINRA Rule 2165 creates a safe harbor for member firms to place temporary holds on outgoing disbursements of cash or securities when financial exploitation of specified adults is reasonably suspected.
The rule aims to prevent fraudulent transfers or theft of client assets leaving the brokerage firm.
2
Distinguish between asset disbursements and internal trade executions.
Disbursements refer to transfers of funds or securities out of the customer's account to an outside party, whereas trade executions involve buying or selling securities within the account portfolio.
FINRA Rule 2165 safe harbor specifically protects temporary disbursement holds, not trade execution freezes.

Key Concept

FINRA Rule 2165 Temporary Hold Scope (Disbursements vs. Trade Executions)
Estimated Time:45s
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Topics

Financial Exploitation of Senior Investors and Vulnerable Adults