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SEC, NASAA, and FINRA Recognize One-Year Anniversary of The Senior Safe Act by Promoting Increased Reporting of Suspected Financial Exploitation of Seniors and Vulnerable Adults

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  • Posted on: Jun 3 2019

It has been a little over one year since President Trump signed into law the Senior Safe Act of 2018 (“Act”) (here). Enacted as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the Act is designed to “enlist[] financial institutions as allies in the fight against financial abuse of older adults by allowing banks, credit unions, investment advisers and brokers to report suspected fraud to law enforcement without fear of being sued, as long as they have trained their employees in how to detect suspicious activity.” See Victoria Sackett, “New Law Targets Elder Financial Abuse.” (AARP May 24, 2018 (here).)

To mark the one-year anniversary of the Act, the Securities and Exchange Commission (“SEC”), the North American Securities Administrators Association (“NASAA”), and the Financial Industry Regulatory Authority (“FINRA”) have issued a fact sheet to increase awareness “among broker-dealers, investment advisers, and transfer agents of the Act and how the Act’s immunity provisions work.” (The SEC’s announcement can be found here.) The fact sheet provides information on the immunity and training provisions of the Act, as well as additional resources from the SEC, NASAA, and FINRA.

The Act was modeled after a Maine statute with a similar name, the Senior$afe Program. That program was the result of a joint effort between regulators and the financial and legal communities to help financial and banking advisors identify and prevent the financial abuse and exploitation of seniors and vulnerable adults. Like the Senior$afe Program, the Act was intended to “empower and encourage our financial service representatives to identify warning signs of common scams and help prevent seniors from becoming victims.” See statement by Sen. Susan Collins (R-Maine), co-author of the Senate version of the Act (here). It gives “financial professionals—those on the front lines who can best spot fraud and abuse—the tools they need to safely and securely take steps to protect seniors and their life savings.” Id. (quoting Sen. Claire McCaskill (D-Missouri), co-author of the Act).  

According to AARP, “[o]ne in 5 older Americans are victims of financial exploitation each year.” (Here.) These “victims lose $3 billion annually, or more than $120,000 apiece, ‘the amount a typical 50-plus household has in retirement savings.’” See 2016 report by the AARP Public Policy Institute (here).  

The Act provides immunity under bank privacy laws to banking and financial institutions (i.e., a “covered institution”) for reporting suspected financial abuse and exploitation of seniors and vulnerable adults to a “covered agency” (i.e., a state regulatory agency, the SEC, “a State or local agency responsible for administering adult protective service laws,” and a law enforcement agency). Notably, the Act neither requires reporting financial abuse and exploitation nor the implementation of educational and training programs to detect and stop such activity. Thus, to encourage the training necessary to identify and report suspected abuse and exploitation, the Act conditions the grant of immunity on the provision of educational and training programs by the participating financial and banking institutions.

Under Section 303(b)(2)(A)(ii)-(iv) of the Act, the training must: (1) instruct “how to identify and report the suspected exploitation of a senior citizen internally and, as appropriate, to government officials or law enforcement authorities, including common signs that indicate the financial exploitation of a senior citizen”; (2) “discuss the need to protect the privacy and respect the integrity of each individual customer of the covered financial institution,” and (3) “be appropriate to the job responsibilities of the individual attending the training.”

Training for current employees should be conducted “as soon as reasonably practical.” Section 303(b)(2)(B)(i). For an “individual who begins employment, or becomes affiliated or associated, with a covered financial institution after the date of enactment of th[e] Act”, training should be conducted “not later than 1 year after the date on which the individual becomes employed by, or affiliated or associated with, the covered financial institution.” Section 303(b)(2)(B)(ii). The Act also requires the covered institution to maintain records showing the individuals who completed the training and the content of the training provided. Section 303(b)(2)(C).

Commenting on the one-year anniversary of the Act and the issuance of the fact sheet, SEC Chairman, Jay Clayton, stated: “Financial professionals can provide a critical frontline role in identifying and reporting senior financial exploitation. The SEC strongly encourages broker-dealers and investment advisers to train their personnel in accordance with the Senior Safe Act. We also encourage all investors, including our most vulnerable, to ensure they are dealing with a registered investment professional.”

Michael S. Pieciak, NASAA President and Vermont Commissioner of Financial Regulation, also commented on the anniversary of the Act and the issuance of the fact sheet, stating: “In reminding broker-dealers and investment advisers of the Senior Safe Act’s important immunity provisions, we hope to encourage firms to train their employees on how to detect and report suspected senior financial exploitation. Early detection and reporting are critical to help prevent elder financial abuse and the devastating financial and emotional impacts that ensue.”

Finally, FINRA President and CEO Robert Cook marked the anniversary of the Act and the issuance of the fact sheet by saying: “Protecting senior investors has long been a top priority for FINRA. The Senior Safe Act seeks to empower financial professionals to detect and report cases of suspected abuse of senior investors and we believe it is important to broaden awareness and understanding of the Act throughout the securities industry.”

[The foregoing statements can be found in the SEC’s announcement (here).]  

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