In January 2026, the Financial Industry Regulatory Authority (FINRA) proposed a new set of rule changes aimed at strengthening protections against fraud and financial exploitation, with a particular focus on elderly and vulnerable investors. The proposal is outlined in FINRA Regulatory Notice 26-02 and reflects growing concern that financial fraud is becoming more widespread, sophisticated, and damaging—especially for senior accountholders.
FINRA noted that despite existing safeguards, fraud remains a persistent and escalating risk, often resulting in irreversible financial harm for affected customers. The proposed changes are intended to provide broker-dealers with additional tools and flexibility to intervene when fraud or exploitation is suspected.
Key Elements of the Proposal
The proposal introduces several substantive updates across three main areas:
-
Enhancements designed to increase the adoption and effectiveness of trusted contact designations
-
Expanded authority for firms to extend temporary holds when financial exploitation of senior or vulnerable adults is suspected
-
A new, optional short-term “speed bump” hold applicable to customers of any age when fraud is suspected
Each of these measures is intended to strengthen early intervention while maintaining flexibility for member firms.
Trusted Contacts and Emergency Contacts
Under FINRA Rule 4512, broker-dealers are currently required to make reasonable efforts to obtain trusted contact information for non-institutional customers at account opening. Trusted contacts serve as a resource in situations such as suspected financial exploitation, diminished capacity, or difficulty reaching the customer.
The proposal introduces several refinements:
-
Firms would be permitted to use the alternative term “emergency contact” instead of “trusted contact,” recognizing that the former may be more familiar or intuitive to some customers. FINRA emphasized that this change is terminological only and does not alter the contact’s role under the rule.
-
Customers would be allowed to designate a single trusted or emergency contact across all of their accounts held at a member firm, helping ensure consistent and timely outreach when concerns arise.
FINRA believes these changes could meaningfully increase customer participation in contact designation, thereby improving firms’ ability to respond effectively to suspected fraud or exploitation.
Expanded Temporary Hold Authority Under Rule 2165
FINRA Rule 2165 currently allows firms to place temporary holds on securities transactions or disbursements for a “specified adult” when there is a reasonable belief of financial exploitation. Specified adults include customers aged 65 or older, as well as adults with mental or physical impairments that may limit their ability to protect their own interests.
Under the existing framework, firms may impose:
-
An initial temporary hold of up to 25 business days
-
One additional extension of up to 30 business days if the matter is reported to a regulator, court, or protective agency
This results in a maximum hold period of 55 business days, unless further extended at the request of a state agency.
FINRA acknowledged industry feedback indicating that this timeframe is often insufficient for governmental authorities to investigate and respond to suspected exploitation. As a result, the proposal would:
-
Extend the maximum temporary hold period from 55 to 145 business days
-
Permit up to three additional 30-business-day extensions, provided the firm continues reasonable follow-up with relevant authorities
-
Clarify that U.S. federal agencies, in addition to state agencies, may qualify as appropriate authorities for reporting and coordination purposes
These changes are intended to provide firms with greater flexibility while maintaining safeguards against unnecessary or prolonged restrictions.
Proposed “Speed Bump” Rule for Suspected Fraud
The proposal also introduces a new FINRA Rule 2166, which would allow broker-dealers to implement a short-term temporary delay of up to five business days on transactions or disbursements when they reasonably believe fraud is occurring.
Key features of the proposed rule include:
-
Applicability to all customers, regardless of age or mental capacity
-
Use as a brief intervention period to notify customers and relevant parties of suspected fraud
-
A requirement to notify authorized parties and the customer’s trusted contact within two business days of imposing the delay
-
Automatic expiration of the delay after five business days unless extended or terminated by a court or governmental authority
FINRA described this mechanism as a protective “speed bump,” designed to give firms and customers time to identify and stop fraudulent activity before irreversible losses occur.
Permissive Nature of the Framework
Importantly, FINRA emphasized that both the existing and proposed rules are permissive rather than mandatory. With the exception of the requirement to request trusted contact information, firms are not obligated to place holds or detect fraud proactively.
As stated in the proposal, FINRA’s intent is to provide member firms with flexible regulatory tools, not to impose affirmative duties to identify or prevent all fraud. However, when firms choose to act under these rules, they must strictly follow the procedural safeguards and notification requirements outlined in the regulations.
Comment Period and Next Steps
The proposed rule changes are subject to a public comment period, which will remain open until March 9, 2026. FINRA will review industry and public feedback before determining whether to finalize or revise the proposals.
If adopted, the changes would represent a meaningful expansion of broker-dealer authority to intervene in suspected fraud cases, while reinforcing FINRA’s broader focus on protecting senior and vulnerable investors in an increasingly complex financial threat environment.