SEC and FINRA Issue Report on National Senior Investor Initiative

The SEC and FINRA issued a report titled “The National Senior Investor Initiative.” The report is intended to help broker-dealers assess, craft and refine their policies for investors who are nearing or entering into retirement.

The report includes observations and practices identified in the agencies’ examinations of forty-four broker-dealers. The examinations focused on how firms conduct business with senior investors, particularly in the following areas:

  • the types of securities purchased by senior investors;
  • the suitability of recommended investments;
  • the training of brokerage firm representatives;
  • the use of designations such as “senior specialist”; and
  • disclosures.

Lofchie Comment: Although the Report focuses on senior investors, it is also a good resource to review general sales, communications, suitability and supervision practices. It is worthwhile reading for all sales supervisors and compliance professionals. Firms should compare their retail sales procedures against those in the document to see whether the comparison helps them to identify any gaps.

One current regulatory “hot item” raised in the Report is that a firm should consider filing a suspicious activity report (“SAR”) when its employees have reason to suspect elder abuse. Another small but interesting point: different firms used different ages to determine which investors’ transactions had to be specially reviewed because the investors were “old.”

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