Je veux savoir à propos de…

Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices Notice announcing Commission approval.
2. Statutory Basis The proposed rule change is consistent with the provisions of Section 15Ab6 of the Act,44 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The proposed rule change will promote investor protection by allowing for additional time for firms to resolve matters and for APS agencies, state regulators and law enforcement to conduct thorough investigations of suspected financial exploitation.
Customers would benefit from this extension in instances where the additional time allows for a positive identification of financial exploitation and retention of the disbursement amount within the account. The proposed rule change also will allow firms to place temporary holds on transactions, which should prevent harm to exploited customers such as being subject to adverse tax consequences, early withdraw penalties or investments that do not align with their investor profiles. Moreover, the rule incorporates numerous safeguards that apply to each temporary hold and that are designed to ensure that there is not a misapplication of the rule.

khammond on DSKJM1Z7X2PROD with NOTICES

B. Self-Regulatory Organizations Statement on Burden on Competition FINRA does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. All member firms would be subject to the proposed rule change.
Economic Impact Assessment FINRA has undertaken an economic impact assessment, as set forth below, to further analyze the regulatory need for the proposed rule change, its potential economic impacts, including anticipated costs, benefits, and distributional and competitive effects, relative to the current baseline, and the alternatives FINRA considered in assessing how best to meet its regulatory objective.
Regulatory Need FINRA is active in its efforts to protect senior investors from financial exploitation. In the context of these efforts, and with evidence of a growing 44 15

U.S.C. 78o3b6.

VerDate Sep<11>2014

17:39 Jun 25, 2021

Jkt 253001

trend of such exploitation,45 FINRA
conducted a review of relevant existing rules and administrative processes that help protect senior investors from financial exploitation. Through this review, FINRA has received feedback on the effectiveness and efficiency of Rule 2165.
Economic Baseline The economic baseline for the proposed rule amendments is the current Rule 2165 and its use by member firms, as well as existing firm policies and state laws related to protecting senior investors. As discussed above, in August 2019, FINRA launched a retrospective review to assess the effectiveness and efficiency of its rules and administrative processes that help protect senior investors from financial exploitation. To conduct the assessment phase of the retrospective rule review, FINRA first sought comment in Regulatory Notice 1927.
FINRA obtained input from several advisory committees comprising member firms of different sizes and business models, investor protection advocates, and member firms, and from trade associations. In addition, FINRA
obtained the perspective of its operating departments that touch the rules and their administration.
FINRA also distributed a survey to all member firms in the first quarter of 2020, to which a subset of firms, ranging from small to large firms, responded.
The purpose of the survey was to collect information and to provide member firms an additional opportunity to provide their views. The economic baseline, regarding the current application of the rule by firms and the effectiveness and efficiency of the rule, is established using the information obtained during the assessment phase.
As noted above, with respect to the use of Rule 2165 in placing a temporary hold on disbursements, of the member firms that indicated having placed a temporary hold,46 approximately 53%
of survey respondents stated that the firm had been unable to resolve the matter within the 25-business day period provided by the rule. For firms responding that any matter took longer to resolve than the 25-business day period, approximately 35% indicated that it took on average 2650 days to resolve the matter and approximately 45 See
supra note 36.
firms responded in the survey that they had placed a temporary hold. Out of the 31
firms that indicated that they had placed a temporary hold, 17 firms indicated that it took more than the 25-business day period to resolve the matter, as currently provided in Rule 2165.
46 Thirty-one
PO 00000

Frm 00123

Fmt 4703

Sfmt 4703

34089

59% indicated that it took on average 51100 days to resolve the matter.
With respect to the issue of placing a temporary hold on transactions, currently 20 states with approximately half of the U.S. population have enacted laws permitting investment advisers and broker-dealers to place temporary holds on disbursements and transactions.
Economic Impacts FINRA has analyzed the potential costs and benefits of the proposed amendments, and the different parties that are expected to be affected. FINRA
has identified senior investors and member firms that serve senior investors as the main parties to be impacted by the proposed amendments.
The proposed amendments to Rule 2165 would permit extending a temporary hold for an additional 30business days if the member firm has reported the matter to a state agency or a court of competent jurisdiction.
FINRA believes that allowing an extension to the temporary hold period would provide firms additional time to resolve matters and for APS agencies, state regulators and law enforcement to conduct thorough investigations of suspected financial exploitation.
Moreover, extensions may allow for greater collaboration and interaction between the member firm placing the hold and other authorities or regulators, on a local, state or national level.
Customers would benefit from this extension in instances where the additional time allows for a positive identification of financial exploitation and retention of the disbursement amount within the account.
Alternatively, if the additional time leads to a determination that no financial exploitation occurred, customers may incur costs from the extended delay in access to the funds.
The proposed amendments would also extend Rule 2165 to permit a member firm to place a temporary hold on a transaction in securities when the firm has a reasonable belief that the customer is being financially exploited.
Twenty states, together containing approximately half of the U.S.
population, already permit firms to place temporary holds on transactions.
The proposed amendments would impact firms in all states by providing a safe harbor under FINRA rules for firms to place holds on transactions.
The extent of the impact would vary across firms depending on their decision to take advantage of the proposed extension of Rule 2165 to
E:FRFM28JNN1.SGM

28JNN1