FINRA Proposes ‘Speed Bump,’ Enhanced Tools to Protect Investors

Features

• FINRA Proposes ‘Speed Bump,’ Enhanced Tools to Protect Investors
  As part of FINRA Forward, we are bolstering our regulatory framework for assisting member firms in addressing suspected fraud and financial exploitation. The following proposed rule changes, filed with the SEC on Aug. 13, are designed to empower firms to intervene quickly while maintaining appropriate safeguards and respecting customer autonomy:

  • New Rule 2166 (Temporary Delays for Suspected Fraud) to introduce an optional, short-term “speed bump” hold to protect customers of any age from suspected fraud. It would allow firms to place a temporary delay of up to 10 business days on a transaction or disbursement when there is a reasonable belief of fraud, including identity theft and account takeovers. 
     
  • Amendments to Rule 2165 (Financial Exploitation of Specified Adults) to allow member firms to extend temporary holds in limited circumstances where relevant government authorities need additional time to communicate with the firm and investigate or resolve suspected financial exploitation of seniors or vulnerable adults. The amendments would extend the maximum temporary hold period from 55 to 145 business days, in three 30-business day increments, subject to safeguards, along with additional modifications that provide enhanced clarity and flexibility. 
     
  • Amendments to Rule 4512 (Customer Account Information) to increase the adoption and effectiveness of trusted contacts. These changes would allow firms to use the more familiar term “emergency contact” as an alternative term to “trusted contact person” and provide greater flexibility for customers to designate a trusted/emergency contact across all their accounts at a firm, rather than account by account. 

  These proposed changes reflect feedback from Regulatory Notice 26-02, and will be published for comment in the Federal Register in the near future.

• FINRA Proposes Updates to Arbitrator Selection Rules
  FINRA filed amendments to our Codes of Arbitration Procedure to provide parties with greater input into replacing arbitrators. The proposal, which was filed with the SEC on Aug. 12, will be published for comment in the Federal Register.   
   
• Notice on New NSCC Requirements for 24x5 Trading  
  FINRA published a technical notice on Aug. 14 to alert member firms about new requirements adopted by DTCC’s NSCC subsidiary relating to the transition to extended hours trading. DTCC outlined the requirements in an FAQ to help its members prepare for NSCC’s expanded hours of operation. Firms are advised to contact the NSCC Integration Team at [email protected] if they have any questions. 
   
• Registration Open for 2027 Crypto Applied Learning Program
  It is not too early to sign up for next year’s Crypto Applied Learning Program at Georgetown University June 8-10. The program provides hands-on training with crypto and blockchain technology to develop practical, applied expertise. Visit this page for more information and to register. 
   
• Investor Insights on Pre-IPO Scams, Liquidity Risk, and More
  A new Investor Insights outlines the risks of pre-IPO investing opportunities and offers tips on how to avoid becoming a victim of a scam. Another recent article provides a primer on market liquidity and how to manage this risk, while another one compares and contrasts ETFs and mutual funds. Members are welcome to share these articles—available here, here, and here, and all Investor Insights—with customers.

• FINRA publishes disciplinary actions to remind members of specific conduct that violates FINRA rules and may result in disciplinary action. The August 2026 Monthly Disciplinary Actions are available here.