Firm News

On April 10, 2018, Kentucky enacted laws intended to prevent the financial exploitation of vulnerable adults, becoming the nineteenth state to pass legislation based on the NASAA Model Act. The lawsare effective as of July 13, 2018 and apply to broker-dealers, investment advisers, and financial institutions. 

Prior to the new legislation, Kentucky’s Economic Security and Public Welfare laws required firms that had knowledge or reasonable cause to suspect that financial exploitation had occurred to file a report with the Cabinet for Health and Family Services (the “Cabinet”).The laws were silent on whether firms could report financial exploitation that was occurring or was suspected to occur in the future.

Under the new laws, however, firms that merely have a reasonable belief that financial exploitation is occurring, has been attempted, or will be attempted are permitted to report the suspected financial exploitation to the Cabinet, the Department of Financial Institutions, and any third party that is reasonably associated with the vulnerable adult. The legislation also permits firms to place an initial 15 day hold on disbursements and transactions. Firms are granted administrative and civil immunity for making a good faith disclosure and placing a temporary hold.

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