FINRA recently barred a registered representative and fined that person $52,270, which represented the commissions he received from the sale of debentures to 12 senior investors. So what was so bad about those transactions?
For one, the high commission investments were not suitable for these elder investors. Second, there were misleading statements made to seven of the 12.
In addition, all but one were retired at the time of purchase. Nine of the ten investors were over the age of 70 at the time of investment.
This disciplinary action is significant because it enhances two points from FINRA’s 2016 exam priorities. You may recall, FINRA announced that it was going to focus on elder issues and, in particular, suitability of investments.
How should firms address these issues? As I have stated in other blogs, the easiest solution is to put elder clients (those over the age of 65) on something akin to heightened supervision. In other words, someone in a supervisory capacity must scrutinize each and every trade made by one of these investors to ensure investment suitability.This may seem a bit much to manage. There is, however, no denying that FINRA is razor focused on this issue and is not taking elder issues lightly.
So maybe heightened supervision is too much for your firm, but do something. Implement some policies and procedures to ensure that proper steps are undertaken to ensure only suitable investments are sold to your elder clients. Otherwise, expect a call from FINRA.
- photo from freedigitalphotos.net