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Stephen P. Wilkes, Esq. swilkes@wagnerlawgroup

Senior and Elder Investors. Who Are They, What To Do. Stephen P. Wilkes, Esq. swilkes@wagnerlawgroup.com 300 Montgomery Street, Suite 600, San Francisco, CA 94104 415-625-0002. Agenda. Introduction SEC/FINRA Exam Priorities National Senior Investment Initiative

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Stephen P. Wilkes, Esq. swilkes@wagnerlawgroup

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  1. Senior and Elder Investors Who Are They, What To Do Stephen P. Wilkes, Esq. swilkes@wagnerlawgroup.com 300 Montgomery Street, Suite 600, San Francisco, CA 94104 415-625-0002

  2. Agenda • Introduction • SEC/FINRA Exam Priorities • National Senior Investment Initiative • Other Regulatory Guidance • FINRA Rules 2165 and 4512 – Effective February 5, 2018 • Senior Designations • Legislation/Enforcement

  3. Introduction • State the obvious: population is aging • Financial advisers have duty under Advisers Act, FINRA Rules • Who are the “aged”, the “senior” the “elderly”? • Mental state – is client mentally acute? Diminished capacity? • Abuse

  4. Exam Priorities • SEC 2017 Examination Priorities • Focus on risk specific to elderly and retiring investors • ReTIRE; Public Pensions; Seniors • www.sec.gov/about/offices/ocie/national-examination-program-priorities-2017.pdf • FINRA 2017 Examination Priorities • Senior Investors; Penny Stock • http://www.finra.org/industry/2017-regulatory-and-examination-priorities-letter

  5. National Senior Investment Initiative • SEC OCIE/FINRA Collaborative Exams • Swept 44 broker dealers • Investment products, suitability, training • 13% - procedures for diminished capacity • 33% - suitability guidelines for seniors • Assessed practices and procedures • www.finra.org/file/sec-national-senior-investor-initiative

  6. FINRA Notice 07-43 • Obligations to senior investors • Suitability, best practices, communication, • Financial abuse, diminished capacity • www.finra.org/industry/notices/07-43

  7. NASAA Rule • NASAA adopts Model Rule • Guidance for state registered advisers • Requires “qualified individuals” to notify state in event of abuse • Generally covers age 65 + • www.nasaa.org/38777/nasaa-members-adopt-model-act-to-protect-seniors-and-vulnerable-adults/

  8. Securities Helpline for Seniors • FINRA toll free number • www.finra.org/investors/highlights/finra-securities-helpline-seniors

  9. SEC Investor Bulletin • Investor bulletin educates about planning for diminished capacity • How to help others • www.sec.gov/oiea/investor-alerts-bulletins/ib_illness.html

  10. FINRA Notice 11-52 • Use of certifications and designations that imply expertise • https://www.finra.org/file/regulatory-notice-11-52

  11. FINRA Notice 17-11 • Amends Rule 4512 • Specific account information, reasonable effort to identify a “trusted contact” • Disclosure of ability to contact the “trusted contact” • Adopt Rule 2165 • Safe harbor temporary hold • Required steps, time limits, record retention • Supervision • www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-11.pdf

  12. Legislation/Enforcement • Many states define exploitation, trend • SEC charges penny stock scam in “spongebuddy” product in Florida on 11/30/17

  13. Best Practices • Define elderly, senior, cognitive issues as policy • Monitor accounts, emergency action plans • Training • Titles and certifications • Document friendly account opening • Suitability • Disclosure

  14. Resources • See Appendix A National Senior Investor Initiative, page 33

  15. Important Information This presentation is intended for general informational purposes only, and it does not constitute legal, tax or investment advice from The Wagner Law Group.

  16. Senior and Elder Investors Who Are They, What To Do Stephen P. Wilkes, Esq. swilkes@wagnerlawgroup.com 300 Montgomery Street, Suite 600, San Francisco, CA 94104 415-625-0002

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