Aging Investor Base and Wealthy Baby Boomers Spur Increase in State Laws to Protect Seniors

Client Alert

Bressler, Amery & Ross Has Prepared Survey of Applicable Laws in 50 States and D.C.

Utah and Kentucky are the Latest to Take Action

The nation's aging investor base and baby boomers who control billions of dollars in wealth, coupled with an increase in reports of financial exploitation of seniors, have led to more states adopting legislation to protect vulnerable seniors. The 18th and 19th states to act were Utah and Kentucky and both did so recently.

Bressler, Amery & Ross recently formed a multi-office, interdisciplinary team – Senior Issues: Counseling and Litigation Defense. The purpose of this team is to help corporate clients deal with the many financial and legal issues relating to baby boomers preparing for retirement as well as those seniors who already are retired.

As part of that effort, our group conducted a 50-state survey of laws and regulations pertaining to seniors and vulnerable investors.  The survey, believed to be one of the first of its kind, indicates a nationwide trend toward adoption of model provisions in whole or in part.  To view the survey, go to https://www.bressler.com/DE0ED6/assets/files/Documents/Seniors-Regulations-Chart.pdf

With the laws and regulations in the 50 states rapidly evolving, this survey will be updated as developments warrant. 

As an example of such evolution, the Utah bill was passed on March 16th and is to take effect on May 7th. In Kentucky, a bill passed both houses the week of March 26th and the Governor is expected to sign it soon.

Until earlier this year, Florida appeared ready to become the 18th state to enact legislation designed to protect its elderly and vulnerable citizens from financial exploitation. The Florida Securities Dealers Association (FSDA) and the Securities Industry and Financial Markets Association (SIFMA) were part of the effort to pass this important protection for Florida’s seniors and vulnerable adults.  

Similar to the new Financial Industry Regulatory Authority (FINRA) Rule 2165 (discussed below) and legislation adopted in other states, the new law would have allowed securities dealers and investment advisers to hold a withdrawal from, or transaction in, a customer account if the firm had a reasonable belief that the withdrawal or transaction was the result of financial exploitation.  The Florida House, by a vote of 113-2, passed the legislation, and the bill passed through three Florida Senate committees with nary a nay vote. 

At the last minute, however, as the 2018 legislative session was ending, Florida Governor Rick Scott objected to the legislation and the legislative session ended without the Florida Senate considering the bill. FSDA and SIFMA will try again in 2019, when Florida will have a new governor. 

The push for better protection of seniors is also evident in two recent FINRA rules that went into effect on February 5.  FINRA Rule 2165 permits members to place temporary holds on account disbursements under certain circumstances where the FINRA member has reason to believe a senior client is the victim of fraud.  The other rule, known as the “Trusted Contact Rule,” requires members to make reasonable efforts to obtain the name of and contact information for a ”trusted contact person” for a customer’s account.

With 10,000 Americans turning 65 every day through 2030, the issue of financial exploitation of seniors will be with us for a while to come. And the push for more legislation will continue.