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.

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SEC Targets Investment Adviser for Misleading Clients

June 19, 2018

On June 4, 2018 the SEC (Securities and Exchange Commission) issued a press release announcing the imposition of an $8 million civil penalty against an investment adviser in New York for failing to disclose conflicts of interest to its clients. The SEC also announced the filing of a litigated action against two investment adviser representatives of the firm for misleading clients and concealing material conflicts of interest. The investment adviser neglected to disclose agreements with product and service providers that led to the investment adviser receiving undisclosed compensation. The Director of the SEC’s New York Regional Office said, “Investment advisers have an obligation to disclose direct and indirect financial incentives to clients.” Click here to read the SEC’s press release.

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Investment Advisers Need to Train Supervised Persons and Update Compliance Manual Due to Recent Passage of Senior Safe Act

June 12, 2018

Over the past several years, there has been a significant amount of movement within the financial services industry to develop policies, rules, and regulations that help safe guard the senior investor community. In 2014, the U.S. Securities and Exchange Commission (“SEC”), in coordination with FINRA, released a report on a recent senior investor initiative they had conducted. The exams that comprised the report focused on issues of suitability of investments for seniors, disclosures, account documentation, diminished capacity, and senior financial exploitation. This initiative showed that the SEC was taking an interest in senior protections and that investment advisers must follow different policies and procedures when recommending securities to and working with senior clients.

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