On January 8, 2026, FINRA issued Regulatory Notice 26-02 announcing proposals for a new rule and revisions to two existing rules. FINRA seeks to revise Rule 4512’s provisions regarding trusted contact persons, to increase Rule 2165’s maximum hold period, and to introduce Rule 2166 that allows for a “speed bump” hold when a member firm suspects fraud of any investor regardless of age or capacity. FINRA is seeking comments on its proposals from now until March 9, 2026.
In recent years, financial scams have been a significant and growing problem, and as criminals have access to more sophisticated technology, the problem only worsens. Although senior investors have been affected the most, investors of all ages are victims of scams. The FBI’s annual “Internet Crime Report” found that Americans lost more than $16 billion to fraud in 2024, with those 60 and older accounting for at least $4.8 billion of those losses.[1] FINRA is seeking to combat this growing problem on numerous fronts, including with proposed rule changes. FINRA previously sought comments on how to better protect investors from fraud through Regulatory Notice 25-07, and the proposed rule revisions are the result of the comments.
FINRA Rule 4512 Customer Account Information – FINRA proposes changes to Rule 4512’s provisions regarding trusted contact persons with the aim to increase the number of investors naming a contact.
- The revised rule gives member firms the option to use the term “emergency contact” instead of “trusted contact person” with the hope that the more familiar term will increase usage by customers.
- The proposed revisions also allow firms to give customers the option, when naming a trusted contact, to apply the contact to all the customer’s existing and future accounts with the firm. Importantly, the firm must also still give the customer the option to apply the contact on an account-by-account basis.
- FINRA also proposes a ministerial change—deleting reference to application of the rule to accounts opened prior to inclusion of the trusted contact provisions as the passage of time has rendered this provision no longer needed.
FINRA Rule 2165 Financial Exploitation of Specified Adults – The most significant proposed change to Rule 2165 is an increase in the potential hold period available when the firm reasonably believes that financial exploitation has occurred of a “Specified Adult”—a senior investor or other investor the firm reasonably believes is impaired. This increased time would allow the authorities more time to assess reports of fraud.
- The current rule allows a firm to place a temporary hold on an account of 15 to 25 business days, with the possibility of a 30-day extension. FINRA proposes increasing the maximum potential hold period to 145 total business days with three additional 30-day increments.
- To continue to extend the hold period, the firm must have reported the potential fraud to the authorities and followed up on the report without a resolution. The revisions also add an explicit reference to “federal authorities” as the text was previously limited to state.
- The member firm also must notify the authorized parties on the account of the hold extension and reason therefor and must continue to process transfers which the firm does not believe to be fraudulent (i.e. regular bill payments).
- FINRA proposes several other smaller changes including allowing additional individuals within the member firm to facilitate the administration of the holds.
New FINRA Rule 2166 Temporary Delays for Suspected Fraud – FINRA proposes new Rule 2166 that allows member firms to institute a five-day temporary hold on a transaction or disbursement—referred to as a “speed bump”—when it suspects fraud in the account of any customer, irrespective of age or capacity. This would allow member firms time to educate customers on suspected fraud.
- The rule is modeled after FINRA Rule 2165 but allows for a shorter hold period of five days, and the application is not limited to “Specified Adults.”
- To institute the hold, the member firm must reasonably believe fraud has occurred, is occurring, or will occur; must notify the authorized parties on the account within two days; and must lift the hold no later than five days after placing it unless it is extended by a regulator, agency, or court.
- The rule also includes supervision, training, and record keeping requirements similar to Rule 2165.
In addition to the proposed rule changes, FINRA notes that its multi-faceted approach to combatting fraud and financial exploitation includes training programs for member firms, its new Fraud Intelligence Fusion Center (FIFC), and education of investors through things like the FINRA Securities Helpline for Seniors.
Read the full Regulatory Notice and text of the rule proposals here: Regulatory Notice 26-02 | FINRA.org.
[1] See Federal Bureau of Investigation Internet Crime Complaint Center, FBI Internet Crime Report 2024, at 4, reporting overall losses of $16.6 billion in 2024. The Report shows that Americans 60 and older accounted for $4.8 billion of those losses but also notes that not all complaints are associated with an age range. Id. at 8.