FINRA to Check Securities Firms’ Sales Practices with Seniors

The Financial Industry Regulatory Authority (FINRA) announced the initiation of two regulatory sweeps intended to ensure that securities firms are using appropriate sales practices in their dealings with seniors and individuals nearing retirement.

The first sweep will examine whether brokers are using so-called “professional” designations to mislead and defraud investors, according to a FINRA news release. FINRA is concerned about the proliferation of professional designations, particularly those that require no meaningful training or specialized knowledge but suggest an expertise in retirement planning or financial services for seniors.

The sweep also will help inform possible rulemaking on the use of designations, the release said.

FINRA has also issued a comprehensive Regulatory Notice to the industry that informs firms and brokers about their obligation under securities rules when selling products to seniors. The Notice outlines best practices in areas ranging from suitability to acceptable use of professional designations that firms can use when dealing with senior customers.

In the second sweep, FINRA will look at early retirement seminars conducted by securities firms designed to entice older workers to liquidate their retirement funds and invest them with a specific firm or representative. In the past year, FINRA fined two firms a total of $5.5 million and ordered the firms to pay $26 million in restitution related to early retirement investment schemes aimed at Exxon and Bell South employees.

In addition, FINRA is launching a new campaign aimed at informing human resource professionals and unions about the risks of flawed or fraudulent early retirement seminars. FINRA will offer a Seminar Scan program that will review the information related to a financial seminar sent to a human resource department.

There are two other regulatory sweeps ongoing in the area of protecting seniors – one examining the sale of collateralized mortgage obligations targeted at seniors, and a second focused on the sale of life settlements. FINRA currently has about 70 open investigations that involve seniors or senior-related issues.

More information is at