Financial Institutions Law Alert

Arkansas and Hawaii are the latest states to enact laws enhancing the protection of elder and vulnerable adults from financial exploitation. On July 28, 2021, Arkansas’s amendment to its financial exploitation law became effective. The enacted Arkansas Senate Bill 151, now Act 533,  modifies Arkansas’s financial exploitation law, Ark. Code § 23-42-309, by allowing broker-dealers and investment advisers who suspect financial exploitation to delay a transaction, in addition to the previously allowed delay of a disbursement. Further, the law replaces an “eligible” adult with a “vulnerable” adult. A vulnerable adult is someone who is (i) sixty-five or older; (ii) supervised by adult protective services; or (iii) thought to be susceptible to financial exploitation.  Arkansas also now requires firms to share documentation, including books and records, of the suspected financial exploitation in order for the firm to achieve immunity from any administrative or civil liability resulting from the disclosure.

Hawaii also recently enacted legislation protecting elder and vulnerable adults from financial exploitation, which became effective on June 20, 2021. The new law states that broker-dealers and state-registered investment advisers “should” report suspected financial exploitations to the Securities Enforcement Branch or Commissioner of Securities. Firms are also allowed, but not required, to contact (i) third parties previously designated by the eligible adults or (ii) individuals reasonably associated with the eligible adults. Consistent with Arkansas’s financial exploitation act, Hawaii’s law also permits broker-dealers and investment advisers to delay disbursements or transactions from an account owned by an eligible adult if certain conditions are met. Firms that take action pursuant to these provisions in good faith and exercising reasonable care are granted administrative and civil immunity.

Further detail regarding state statutes in this area can be found in Bressler’s interactive Senior and Vulnerable Investor Issues Map


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