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Zorluk: OrtaFinancial Exploitation of Senior Investors and Vulnerable Adults

A 74-year-old client contacts a broker-dealer to place two requests: first, to liquidate $40,000 worth of mutual fund shares in her account, and second, to immediately disburse the cash proceeds via wire transfer to an unknown recipient in a foreign jurisdiction. The registered representative suspects that the client may be a victim of financial exploitation. Under FINRA Rule 2165 (Financial Exploitation of Specified Adults), which of the following actions is the broker-dealer permitted to take?

  1. Place a temporary hold on the disbursement of the $40,000 cash proceeds while continuing to execute the mutual fund liquidation order as instructed.Cevap
  2. B
    Place a temporary hold on both the mutual fund trade execution and the outward disbursement of cash proceeds.
  3. C
    Freeze all trading and account activity entirely without providing notification to the designated trusted contact person.
  4. D
    Refuse to process the mutual fund trade order while permitting the wire transfer of existing cash reserves.

Cevap

The broker-dealer is permitted to place a temporary hold on the disbursement of the $40,000 cash proceeds while continuing to execute the mutual fund liquidation order as instructed.
The correct response reflects the precise authority granted under FINRA Rule 2165. A member firm that reasonably suspects financial exploitation of a Specified Adult (natural person age 65+ or 18+ with impairments) is permitted to place a temporary hold on the disbursement of funds or securities out of the customer's account. However, Rule 2165 does not grant authority to freeze trade executions (such as liquidating mutual fund shares) or to freeze the entire account.

Adım Adım Çözüm

1
Identify the scope and protection coverage of FINRA Rule 2165.
The client is a Specified Adult (age 65 or older), qualifying her for protection under FINRA Rule 2165 upon reasonable suspicion of financial exploitation.
FINRA Rule 2165 defines Specified Adults as individuals aged 65 and older, or persons aged 18 and older with physical or mental impairments.
2
Distinguish between disbursements and trade executions under FINRA Rule 2165.
Rule 2165 permits a temporary hold on disbursements of funds or securities out of an account, but it does NOT authorize member firms to place holds on security trade executions (buy/sell orders).
The rule is targeted at preventing the fraudulent transfer/withdrawal of customer assets out of the firm, while preserving the investor's right to manage investment market positions.
3
Apply the rule to the dual request in the scenario.
The firm may execute the mutual fund sale (trade order) but place a temporary hold on the outgoing wire transfer (disbursement).
Executing the trade respects the customer's transaction request, while holding the wire protects the assets from potentially illegal transfer out of the account.

Anahtar Kavram

Scope of Temporary Holds under FINRA Rule 2165
Tahmini Süre:1m 15s
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Konular

Financial Exploitation of Senior Investors and Vulnerable Adults