Finra Statement to the Senate on Protecting Senior Investors

Gerri Walsh, President of the Finra Investors Education Foundation, and Vice President of Finra Investor Education, made a Statement for the Record at a hearing of the Senate Special Committee on Aging.  (Finra) In this statement, Walsh reiterated Finra’s commitment and efforts to protect senior investors.  I have excerpted some of the text below:

How FINRA Protects Older Investors


At FINRA, we serve every U.S. investor, from newlyweds planning to buy a home to parents saving for a child’s college education to seniors depending on a secure retirement. Over the past five years, we have been keenly focused on issues impacting older investors, especially those at or approaching retirement. For example, in September 2007, FINRA issuedRegulatory Notice 07-43, which highlighted certain issues common to many older investors—including suitability, senior- or retirement-specific credentials or professional designations, high-pressure sales seminars and diminished capacity. The Notice reminded broker-dealers of their obligations in this area and provided examples of industry best practices. That same year, FINRA’s Member Education and Training Department launched the first in a series of webcasts to help registered representatives and other frontline brokerage firm employees learn about their compliance obligations when working with senior customers. Topics in this free educational series include Senior Investor Issues: Diminished Decisional Capacity, Senior Investor Suitability Considerations and Supervisory Considerations for Working with Seniors—and are available at

In 2008 and 2010, FINRA joined with other regulators to issue findings and guidance on firms’ practices relative to senior investors. More recently, at the beginning of 2011, FINRA issued its Annual Regulatory and Examination Priorities Letter, which reiterated that the protection of vulnerable customers, including senior investors, continues to be a high regulatory priority—and that one area of particular focus is the use of certifications and designations that imply expertise, certification, training or specialty in advising senior investors. And in November 2011, FINRA published Regulatory Notice 11-52: FINRA Reminds Firms of Their Obligations Regarding the Supervision of Registered Persons Using Senior Designations to remind firms of their supervisory obligations regarding the use of certifications and designations that imply expertise, certification, training or specialty in advising senior investors.

In addition to educational outreach to regulated firms and registered personnel, FINRA has also increased our efforts to fight fraud and, to that end, established several programs to help root out bad actors and help consumers protect themselves. In early 2009, we created the Office of the Whistleblower, and later that year, also established the Office of Fraud Detection and Market Intelligence (OFDMI). Through this office, staff with expertise in fraud detection and investigation can provide a heightened review of potentially serious frauds. OFDMI’s mission is to ensure that allegations of serious fraud received by FINRA in the form of complaints, regulatory filings and other sources are subjected to a heightened review. OFDMI serves as a centralized point of contact on fraud issues, within FINRA and externally with other regulators and the public. The creation of OFDMI has expedited fraud detection and investigation, by pursuing matters as far as possible and by referring cases that fall outside of FINRA’s scope to the appropriate authorities.

Compliance and supervisory staff would do well to review and circulate these resources among their employees during their training.

Posted on November 19, 2012 in Compliance, Finra

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