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 Other Regulatory Guidance FINRA Rules 2165 and 4512 – Effective February 5, 2018 Senior Designations Legislation/Enforcement

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

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

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

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

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/

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

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

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

FINRA Notice 17-11 Amends Rule 4512 Adopt Rule 2165 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

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

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

Resources See Appendix A National Senior Investor Initiative, page 33

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.

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