I submit this comment in my capacity as an attorney who represents consumers, frequently elderly investors, in arbitration matters before FINRA. My practice includes representing victims of elder financial exploitation, fraud, and unauthorized account activity. In that role, I routinely observe how broker-dealer policies and discretionary enforcement decisions directly impact vulnerable seniors after irreversible losses have already occurred.
Although FINRA Rule 2165 is framed as a consumer protection measure intended to prevent elder abuse and financial exploitation of seniors, in practice it operates primarily as a permissive safe harbor for broker-dealers. By allowing firms to decline intervention even when credible red flags of exploitation are present, the rule shields member firms from liability while leaving elderly customers exposed. The permissive nature of the rule undermines its stated purpose of protecting senior investors.
The problem is structural and linguistic. The word “may” in Rule 2165(a)(b)(1) should be replaced with “shall.” Without this change, the rule prioritizes protection of FINRA member firms over the safety of elderly customers, precisely the population the rule was intended to protect. A consumer protection rule that allows inaction in the face of clear exploitation indicators is not a consumer protection rule in practice.
Effective elder financial protection cannot depend on discretionary compliance where conflicts of interest are inherent. Broker-dealers face strong financial incentives not to delay or restrict transactions that generate revenue, particularly in large or time-sensitive accounts held by seniors. As currently written, Rule 2165 elevates institutional risk management over meaningful investor protection.
FINRA should amend Rule 2165 to require mandatory transaction holds and reporting when objective indicators of elder financial exploitation are present, supported by clear standards and regulatory oversight. Without mandatory obligations, Rule 2165 will continue to function as a liability shield rather than a genuine safeguard for elderly investors. Protecting seniors from financial abuse should not depend on voluntary action by the very institutions whose incentives may conflict with that goal.
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Marc Fitapelli Comment On Regulatory Notice 26-02
Dear FINRA Regulatory Policy Committee,
I submit this comment in my capacity as an attorney who represents consumers, frequently elderly investors, in arbitration matters before FINRA. My practice includes representing victims of elder financial exploitation, fraud, and unauthorized account activity. In that role, I routinely observe how broker-dealer policies and discretionary enforcement decisions directly impact vulnerable seniors after irreversible losses have already occurred.
Although FINRA Rule 2165 is framed as a consumer protection measure intended to prevent elder abuse and financial exploitation of seniors, in practice it operates primarily as a permissive safe harbor for broker-dealers. By allowing firms to decline intervention even when credible red flags of exploitation are present, the rule shields member firms from liability while leaving elderly customers exposed. The permissive nature of the rule undermines its stated purpose of protecting senior investors.
The problem is structural and linguistic. The word “may” in Rule 2165(a)(b)(1) should be replaced with “shall.” Without this change, the rule prioritizes protection of FINRA member firms over the safety of elderly customers, precisely the population the rule was intended to protect. A consumer protection rule that allows inaction in the face of clear exploitation indicators is not a consumer protection rule in practice.
Effective elder financial protection cannot depend on discretionary compliance where conflicts of interest are inherent. Broker-dealers face strong financial incentives not to delay or restrict transactions that generate revenue, particularly in large or time-sensitive accounts held by seniors. As currently written, Rule 2165 elevates institutional risk management over meaningful investor protection.
FINRA should amend Rule 2165 to require mandatory transaction holds and reporting when objective indicators of elder financial exploitation are present, supported by clear standards and regulatory oversight. Without mandatory obligations, Rule 2165 will continue to function as a liability shield rather than a genuine safeguard for elderly investors. Protecting seniors from financial abuse should not depend on voluntary action by the very institutions whose incentives may conflict with that goal.
Respectfully submitted,
Marc Fitapelli
MDF Law PLLC