Is Your Investment Adviser Subject to Mandatory Reporting of Financial Exploitation of Senior Clients?

July 17, 2018

Recently, there has been a wave of legislation and regulatory action focused on senior investor protections. The U.S. Congress just passed the Senior Safe Act, a law which provides legal immunity to an investment adviser, if the investment adviser meets certain requirements, for the act of reporting suspected senior financial exploitation. Both the U.S. Securities and Exchange Commission (“SEC”) and FINRA have had a senior investor exam initiative going on since 2014. In addition, almost every state has a law pertaining to senior exploitation.

Thus far, 24 states have enacted some form of legislation which mandates the reporting of suspected senior financial exploitation. State legislation on mandatory reporting isn’t uniform and varies widely state to state. Some state reporting laws are broad, requiring anyone who knows of, or suspects senior exploitation to report it. Other state reporting laws are narrowly crafted and explicitly list an investment adviser as being required to report suspected senior exploitation. Whether a state mandatory reporting law applies to a state registered investment adviser vs. an SEC registered investment adviser also varies. This typically depends on how an investment adviser is defined under the state reporting law and state securities act. In addition, each state reporting law has different reporting procedures, definitions of various terms, and agencies to report the suspected financial exploitation. The Senior Safe Act, which is applicable to both state and SEC registered investment adviser firms, provides a baseline by which one can receive immunity for the act of reporting financial exploitation of a senior client. However, state reporting requirements are likely still applicable to your investment adviser firm if it is operating in one of the 24 states with a mandatory reporting requirement.

RIA Compliance Consultants has prepared the “Senior/Vulnerable Clients – Compliance Package” to assist firms in meeting immunity requirements under the federal standard, as well, help them with internal and external reporting and documentation procedures. The documents included in the package are listed below. To see a description of the document, click on the title and follow the link.

  1. Senior/Vulnerable Clients – Training (PowerPoint)
  2. Senior/Vulnerable Clients – Training Quiz
  3. WSP/CoE Section Update – Protecting Older and Vulnerable Clients with Diminished Capacity
  4. Senior/Vulnerable Clients – Client Authorization to Communicate with Trusted Emergency Contact
  5. Senior/Vulnerable Clients – State Reporting Requirements
  6. Senior/Vulnerable Clients – Internal Reporting Form for Exploitation

The “Senior/Vulnerable Clients – Compliance Package” is available here. Additionally, any of these documents can be purchased a la carte here. RIA Compliance Consultants will also offer a Webinar covering the Senior Safe Act on Thursday, July 19, 2018. A link to the description and shopping cart item to that webinar can be found here.

Posted by Grant Parr
Labels: Seniors