June 20, 2019

Senior Safe Act

On May 23, 2019, the Securities and Exchange Commission (“SEC”), the North American Securities Administration Association (“NASAA”), and the Financial Industry Regulatory Authority (“FINRA”) issued a fact sheet designed to raise awareness among broker-dealers, investment advisers, and transfer agents of The Senior Safe Act (the “Act”). The Act was signed into law on May 24, 2018, and addresses the hurdles financial professionals encounter in reporting suspected senior financial exploitation or abuse to authorities.
The Act protects “covered financial institutions”, which includes investment advisors and their eligible employees, from liability in any civil or administrative proceeding for reporting potential exploitation of a senior citizen to a covered agency. Investment advisors and their representatives often times may be apprehensive to report instances of financial abuse or exploitation in fear of being mistaken or breaching one’s privacy. The Act does not require firms to implement policies and procedures but rather delivers the steps necessary to qualify for legal immunity under the Act.
The fact sheet provides an introduction and definition of the Act and further describes the individuals eligible for immunity under the Act. Advisors should identify individuals that have contact with senior clients as part of performing their roles with the Advisor. Examples of this may include advisors, traders, or individuals reviewing and approving client documents.
Advisors will be required to ensure training is conducted as soon as reasonably practicable for current employees, affiliated persons and associated persons. When the Advisor brings on new individuals the training should occur no later than a year from their hire date. Advisors must maintain a record of which individuals completed the training along with the content provided during the training. This record may be requested by a regulator through the course of an examination.
In order to qualify for immunity, individuals must:

  1. be an employee of the firm who serves as a supervisor, in a compliance/legal function or an investment adviser representative of an investment advisor
  2. undergo sufficient training that encompasses the following: (i) how to identify common red flags that may indicate the financial exploitation of a senior citizen; (ii) how to report the suspected exploitation of a senior citizen both internally and, as appropriate, to government officials or law enforcement authorities; (iii) discuss the need to protect the privacy and respect the integrity of each client; and (iv) be appropriate to the job responsibilities of the individual attending the training.
Other considerations to keep in mind:
  • Individual and institutional immunity differ. An eligible employee that has completed their training and makes a disclosure to a covered agency in good faith with reasonable care would receive individual immunity pursuant to the Act. A covered financial institution also receives institutional immunity when an eligible employee makes a disclosure to a covered agency and all employees have received training to the extent necessary to qualify for immunity under the Act.
  • Immunity established through the Act applies only to disclosures made by a covered institution or an employee of the institution to a “covered agency,” this would not apply to other third parties.
Additional resources are available below:
SEC Resources: SEC Seniors webpage
NASAA Resources: Serve Our Seniors website

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