FYI: The SEC, NASAA and FINRA have jointly issued a Fact Sheet about The Senior Safe Act enacted by Congress last year, to help raise awareness of the Act and to help explain how the Act’s immunity provisions work. In principal part, the Act provides qualified immunity to certain individuals and financial institutions — which could include IAs and BDs — from liability in any civil or administrative proceeding for reporting a case of potential exploitation of a senior citizen to a covered agency.
The multiple-agency Fact Sheet and press release can be accessed here: https://www.sec.gov/news/press-release/2019-75.
The Senior Safe Act is included as Section 303 of the “Economic Growth, Regulatory Relief, and Consumer Protection Act” of 2018: https://www.congress.gov/bill/115th-congress/senate-bill/2155/text#toc-id45B692A3CB264F64BDE568E071AA2CFD.
Although the Act seems to help financial institutions that wish to protect customers, clients and others from exploitation by removing certain concerns about liability for reporting suspected exploitation to the authorities, the immunity provisions in the Act are detailed and tricky, and may not sync up with senior exploitation laws or requirements implemented by other authorities. The uncertainty this creates muddies the question of whether financial institutions will in fact step up to report possible senior exploitation the way it was originally hoped they would.
Among concerns that remain are:
- The Act does not mandate that suspected exploitation be reported. Rather, financial institutions that report would be doing so voluntarily, or possibly mandatorily as a result of other legal requirements (for example, if they are in a state that requires reporting under state laws or regulations).
- The Act’s immunity is only available to a defined group of employees (which could include IA and BD reps of a firm) and the financial institution itself, under certain conditions. This makes it incumbent on firms to set up clear and detailed internal procedures for making any exploitation report.
- Immunity is only available if the employees listed in the Act have received training that meets the requirements of the Act.
- The Act’s immunity only covers reporting to a “covered agency” as defined in the Act (such as a state financial regulatory authority, a state or local adult protective services agency, the SEC or FINRA, among others). It does not cover reporting to a “trusted contact” on the senior’s account, or reporting to any other third party.
- The Act only provides immunity for reporting suspected exploitation of a “senior citizen,” defined as someone 65 or older. Other financial exploitation provisions (such as FINRA Rule 2165) apply to a broader group, including individuals younger than 65 if they are otherwise specified as vulnerable.
- The Act’s immunity does not cover liability that may accrue to the financial institution for withholding or delaying the transmission of funds from the senior’s account when exploitation is suspected, even though other provisions (such as FINRA Rule 2165) permit certain financial institutions to temporarily withhold the disbursement of funds from a senior’s account in certain cases.
If a financial institution fails to meet any of the detailed terms and conditions dictated by the immunity provisions of the Act, it risks not getting the immunity it might otherwise be entitled to for having reported.
* * *