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[Release No. 34-106275; File No. SR-FINRA-2026-018]

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of

Filing of a Proposed Rule Change to Amend FINRA Rules 0150 (Application of Rules to

Exempted Securities Except Municipal Securities), 2165 (Financial Exploitation of

Specified Adults) and 4512 (Customer Account Information) and to Adopt FINRA Rule

2166 (Temporary Delays for Suspected Fraud)

September 3, 2026.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or

“Act”)1 and Rule 19b-4 thereunder,2 notice is hereby given that on August 20, 2026, the

Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange

Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and

III below, which Items have been prepared by FINRA. The Commission is publishing this

notice to solicit comments on the proposed rule change from interested persons.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed

Rule Change

FINRA is proposing to amend FINRA Rules 0150 (Application of Rules to Exempted

Securities Except Municipal Securities), 2165 (Financial Exploitation of Specified Adults) and

4512 (Customer Account Information) and to adopt new FINRA Rule 2166 (Temporary Delays

for Suspected Fraud) to modernize protections for senior and vulnerable investors and to make

additional fraud prevention tools available for all customers.

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

The text of the proposed rule change is available on FINRA’s website at

http://www.finra.org and at the principal office of FINRA.

II.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the

Proposed Rule Change

In its filing with the Commission, FINRA included statements concerning the purpose of

and basis for the proposed rule change and discussed any comments it received on the proposed

rule change. The text of these statements may be examined at the places specified in Item IV

below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most

significant aspects of such statements.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis

for, the Proposed Rule Change

Purpose

Background

FINRA’s Existing Senior Investor Protection Rules

FINRA has long been committed to protecting senior investors and combating financial

fraud through regulation, investor education and assistance, and engagement with member firms,

state and federal agencies and investor protection advocates. FINRA recognizes that member

firms are on the front line of protecting customers from threat actors and has developed a

regulatory framework designed to provide member firms with flexible tools to help protect

senior and vulnerable investors from financial exploitation. This framework includes two rules

that facilitate early detection and intervention through member firms’ ability to contact a

customer’s trusted contact person and place a temporary hold on a transaction or disbursement

when they have a reasonable suspicion of financial exploitation.3

Other FINRA rules that are generally applicable to all customers, but can be particularly relevant in

protecting senior investors, include FINRA Rule 3240 (Prohibition on Borrowing From or Lending to

Trusted Contact Persons

Rule 4512, in part, requires member firms to make reasonable efforts to obtain the

information for a trusted contact person upon the opening of all non-institutional customer

accounts. The trusted contact person is intended to serve as a resource for the member firm in

various situations, including helping to update customer contact information when a customer

becomes unavailable, assisting when concerns arise over possible diminished capacity or other

health issues, protecting assets, and responding to possible financial exploitation. Rule 4512 is

not limited to senior investors, and a trusted contact person can be a valuable tool for customers

of all ages. Designation as a trusted contact person does not give the person power of attorneytype authority over customer accounts, and does not give the person authority to execute

transactions or make decisions about an account. Rather, trusted contact persons are an

important resource for member firms and customers in special circumstances.

While the trusted contact framework has proven valuable, greater rates of adoption could

significantly improve investor protection. According to the FINRA Foundation’s National

Financial Capability Study: 2024 Investor Survey, 42 percent of respondents say they have

authorized a trusted contact person for their investment accounts, up from 38 percent in 2021,

while over half (53 percent) say they have not.4 Among those who have not named a trusted

contact person, nearly half (49 percent, or just over one-quarter of all survey respondents) say

they would be willing to do so.5

Customers) and FINRA Rule 3241 (Registered Person Being Named a Customer’s Beneficiary or Holding

a Position of Trust for a Customer).

Judy T. Lin, Christopher Bumcrot, Olivia Valdes, Gary Mottola, Susan Sarver, Robert Ganem, Christine

Kieffer, & Gerri Walsh, Investors in the United States: A Report of the National Financial Capability

Study, FINRA Investor Education Foundation (December 2025) (“National Financial Capability Study”).

To increase familiarity with and use of this important tool, FINRA has sought to educate investors about

trusted contact persons and highlight the benefits of naming a trusted contact person. See, e.g., FINRA,

SEC & North American Securities Administrators Association, Inc. (“NASAA”), Investor Bulletin: Why

Temporary Hold Framework

Rule 2165 represents the first uniform national standard for placing temporary holds to

address suspected financial exploitation. The rule permits a member firm to place a temporary

hold, with stated time limits, on a securities transaction or disbursement of funds or securities

from the account of a “Specified Adult” when the member firm reasonably believes that financial

exploitation of that adult has occurred, is occurring, has been attempted or will be attempted.

For purposes of Rule 2165, Specified Adult means: “(A) a natural person age 65 and older; or

(B) a natural person age 18 and older who the member reasonably believes has a mental or

physical impairment that renders the individual unable to protect his or her own interests.”6

Currently, Rule 2165 permits a temporary hold for initial periods of 15 to 25 business

days, with the possibility of a single 30-business-day extension (for a total maximum of 55

business days) if the member firm has reported the matter to a state regulator or agency of

competent jurisdiction or a court of competent jurisdiction and the member firm continues to

have a reasonable belief of financial exploitation. The rule allows member firms to extend a

temporary hold beyond the 55-business-day maximum upon a state agency’s request to do so,

which is not required to be accomplished through a formal order.7

Temporary holds under Rule 2165 have played an important role in providing member

firms a way to quickly respond to suspicions of financial exploitation before losses occur for

You Should Consider Adding a Trusted Contact to Your Account (August 25, 2025). FINRA has also

shared effective practices with member firms to highlight approaches that have helped some member firms

achieve higher rates of trusted contact adoption. See Regulatory Notice 22-31 (December 2022); see also

FINRA, 2025 FINRA Annual Regulatory Oversight Report (January 2025); FINRA, 2026 FINRA Annual

Regulatory Oversight Report (December 2025).

Rule 2165(a)(1).

See FINRA, Frequently Asked Questions Regarding FINRA Rules Relating to Financial Exploitation of

Senior Investors at Q.3.2 (“FINRA Seniors FAQs”).

customers. However, FINRA has learned through research and feedback from member firms

and other interested parties that, in some cases, the current 55-business-day limit poses

challenges. Notably, according to the National Adult Protective Services Association

(“NAPSA”), financial exploitation investigations are often the most complex and timeconsuming, and in many instances can take longer than a year.8

The Growing Threat of Fraud and Financial Exploitation

The Federal Trade Commission (“FTC”) found the overall cost of fraud to older adults in

2024 to be approximately $81.5 billion when accounting for underreporting.9 Representing a

portion of fraud losses, the Federal Bureau of Investigation’s Internet Crime Complaint Center

(“FBI IC3”) received reports of more than $7.7 billion lost to fraud by Americans over age 60 in

2025.10 These estimates represent not only devastating financial losses but also the profound

personal toll fraud takes on victims, including shame, isolation and diminished quality of life.

See Letter from Jennifer Spoeri, Executive Director, William Benson & Kendra Kuehn, National Policy

Advisors, and Joe Snyder, Policy Chair, National Adult Protective Services Association, to Jennifer Piorko

Mitchell, Office of the Corporate Secretary, FINRA, dated June 12, 2025 (noting that FINRA’s prior

amendments to Rule 2165, extending the temporary hold period to 55 business days, “mirror the average

time it takes to conduct an APS investigation. This average encapsulates all categories of reports that APS

investigates (i.e., physical, sexual and emotional abuse, self-neglect, caregiver neglect), in addition to

financial abuse. Financial exploitation investigations are often the most complex and time-consuming and

there are many examples of cases being open for more than a year.”).

Federal Trade Commission (“FTC”), Protecting Older Consumers 2024–2025: A Report of the Federal

Trade Commission at 28 (December 1, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/P144400OlderAdultsReportDec2025.pdf (“FTC Protecting Older Consumers”). The actual magnitude of fraud

losses is challenging to estimate due to underreporting. See, e.g., Rachel E. Morgan & Susannah N. Tapp,

Examining Financial Fraud Against Older Adults, Nat’l Inst. of Justice J. (March 20, 2024) (citing data on

fraud against older adults, but noting that “the actual number of fraud cases is unknown as many people do

not report their victimization, and underreporting is especially high for older adults”); U.S. Department of

the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), FIN-2022-A002: Advisory on Elder

Financial Exploitation at 1-2 (June 15, 2022) (“FinCEN 2022 Advisory”) (“Despite the fact that [elder

financial exploitation] is the most common form of elder abuse, the majority of incidents go unidentified

and unreported as victims may choose not to come forward out of fear, embarrassment, or lack of

resources.”).

See FBI IC3, FBI Internet Crime Report 2025 at 6 (“FBI IC3 Report”). This represents a 59 percent

increase in losses from 2024.

For senior investors, fraud losses can be catastrophic. Unlike younger investors who may

have years of future earnings to rebuild their financial security, senior investors are often living

on fixed incomes derived from a lifetime of savings, with limited or no ability to offset

significant losses. The frequently irreversible nature of these losses underscores why FINRA has

placed special emphasis on protecting this vulnerable population and why member firms play

such a crucial role as the first line of defense against financial exploitation.

While the impact of fraud can be devastating for senior investors as a group, the threat of

fraud extends across all age demographics and is growing at an alarming pace.11 The FTC

estimated overall fraud losses in 2024, adjusted to account for underreporting, at $195.9 billion.12

The FBI IC3 had a record-breaking $20.877 billion in reported fraud losses in 2025, representing

a 26 percent increase from 2024.13 Globally, consumers lost over $1 trillion to scams in 2024.14

Criminal perpetrators employ increasingly sophisticated tactics using technology and

artificial intelligence (“AI”), making it more difficult for both member firms and investors to

identify scams.15 These advances have contributed to the rapid evolution and proliferation of

fraud schemes that can victimize investors regardless of age, capacity or sophistication.16

For example, FTC data show that median losses are highest for older adults, but individuals under age 60

accounted for 64 percent of reported fraud in 2024. See FTC Protecting Older Consumers, supra note 9, at

18; see also FTC, Consumer Sentinel Network Data Book 2024 (March 2025) (“FTC 2024 Data Book”).

The FTC’s Consumer Sentinel data are available online in an interactive format.

See FTC Protecting Older Consumers, supra note 9, at 28.

See FBI IC3 Report, supra note 10.

Sam Rogers, International Scammers Steal Over $1 Trillion in 12 Months in Global State of Scams Report

2024, Global Anti-Scam Alliance (November 7, 2024).

See, e.g., FBI, Alert Number: I-120324-PSA: Criminals Use Generative Artificial Intelligence to Facilitate

Financial Fraud (December 3, 2024).

See, e.g., FBI IC3 Report, supra note 10, at 3 (“It has never been more important to be diligent with your

cybersecurity, social media footprint, and electronic interactions. Cyber threats and cyber-enabled crime

will continue to evolve as the world embraces emerging technologies such as artificial intelligence.”);

INTERPOL, INTERPOL Global Financial Fraud Threat Assessment at 17 (March 2026) (“The

proliferation of AI-driven tools, large language models (“LLMs”), cryptocurrencies, and the rapid

expansion of the Fraud-as-a-service (“FaaS”) platforms have collectively lowered barriers to entry,

Overview of Proposed Rule Changes

In light of these evolving threats and based on extensive engagement with member firms

and other interested parties, FINRA is filing this proposed rule change to make additional fraud

prevention tools available for all customers. As discussed in more detail below, FINRA is

proposing:

•

Amendments to Rule 4512 (Customer Account Information) designed to increase

adoption and effectiveness of trusted contacts, by permitting member firms to use the

alternative term “emergency contact” and to provide additional flexibility for a customer

to name a trusted or emergency contact for use across all the customer’s accounts at the

member firm;

•

Amendments to Rule 2165 (Financial Exploitation of Specified Adults) to extend the

maximum temporary hold period under Rule 2165 from 55 business days to 145 business

days, in three 30-business day increments, subject to safeguards, along with additional

modifications that provide enhanced clarity and flexibility; and

•

New Rule 2166 (Temporary Delays for Suspected Fraud) to offer member firms a

separate safe harbor framework, modeled on existing Rule 2165, to protect all customers

(irrespective of age or capacity) from suspected fraud, by permitting a temporary delay of

up to 10 business days on disbursements or transactions when there is a reasonable belief

of fraud. The addition of proposed new Rule 2166 would also require a conforming

amendment to Rule 0150 (Application of Rules to Exempted Securities Except Municipal

Securities).

enabling widespread access to sophisticated fraud capabilities, elevating the generation of financial gain

through fraud schemes to an efficient, global industry.”).

II.

Proposed Amendments to Rule 4512

Enabling Use of the Alternate Term “Emergency Contact”

The proposed addition of new paragraph (e) of Rule 4512.06 would give member firms

the option to use the term “emergency contact” as an alternative to “trusted contact person.”

FINRA believes that providing member firms the flexibility to use the term “emergency contact”

as an alternative to “trusted contact person” would clarify the role for customers who are

unfamiliar with the term “trusted contact person” and potentially increase use of this tool.

Member firms’ written supervisory procedures and training materials would need to reflect that

the terms have the same meaning and obligations.

Providing Additional Flexibility in Naming a Trusted Contact

Person for All Accounts

The trusted contact provisions are part of Rule 4512 and apply to each non-institutional

customer account. FINRA has previously provided guidance permitting a member firm to seek

to obtain trusted contact person information collectively where a customer has more than one

account (e.g., in one update letter for all the customer’s accounts), provided that each of the

affected accounts is clearly identified to the customer.17

To provide additional flexibility, FINRA is proposing to expand this guidance in

proposed new paragraph (d) of Rule 4512.06. This would permit member firms to seek the

customer’s authorization to apply a trusted contact person to all of the customer’s existing and

future accounts with the member firm, provided that the customer is also offered the choice to

assign the trusted contact person on an account-by-account basis rather than to all accounts.

Clarifying and Other Ministerial Changes

See FINRA Seniors FAQs, supra note 7, at Q.4.5.

As a ministerial matter, the proposed amendments delete from Rule 4512.06(a) a

transitional provision that addressed the application of the trusted contact requirement to

accounts that were opened pursuant to a prior rule. Due to the passage of time, this provision is

no longer needed.

In addition, to clarify that member firms are permitted to obtain more than one trusted

contact person, FINRA proposes a minor addition to Supplementary Material .06 to clarify that

nothing in the rule shall prevent a member from obtaining more than one trusted contact person

from a customer.18

III.

Proposed Amendments to Rule 2165

Proposed Changes to Extend the Maximum Temporary Hold Period

FINRA is proposing a structured framework for extending temporary holds beyond the

current 55-business-day maximum, by adding three 30-business-day extensions to a new

maximum of 145 business days (unless otherwise terminated or extended by the relevant

authority) in proposed Rule 2165(b)(5). While many financial exploitation situations are

resolved within the existing framework of the rule, these additional extensions are designed to be

used in those limited circumstances where Adult Protective Services (“APS”), law enforcement,

and other relevant agencies and regulators may need additional time to assess referrals,

For example, Rule 2165 expressly includes reference to plural “Trusted Contact Person(s).” See Rule

2165(b)(1)(B)(ii). See also, e.g., SEC, FINRA, & NASAA, Investor Bulletin: Why You Should Consider

Adding a Trusted Contact to Your Account (August 25, 2025),

https://www.finra.org/investors/insights/trusted-contact (“A trusted contact person must be age 18 or older.

They may be a family member, close friend, attorney, accountant or another third party you believe would

respect your privacy and be willing to help. You may also choose to add more than one trusted contact to

your account. Finally, you may change your trusted contact in your account as often as you wish.”)

(emphasis added).

determine whether to investigate, and communicate to member firms that additional time will be

needed to investigate or resolve the matter.19

The new structured framework would impose measured conditions and other safeguards

to prevent inappropriate extensions of a temporary hold. The ability to extend for each 30business-day period would be conditioned on the member firm making reasonable follow-up

efforts with the relevant authority regarding the status of the reported matter; not having received

a response;20 and continuing to have a reasonable belief of financial exploitation.21

The first extension beyond 55 business days would require notification, which may be

oral, to all parties authorized to transact business on the account and to the trusted contact

person(s) (subject to certain exceptions).22 These individuals would need to be notified of the

extension, the reason for and potential duration of the extension, and how the member firm can

be contacted for questions or concerns.23

The amendment would also require documentation associated with any additional

extension, including the documentation of follow-up efforts, the lack of a response from the

relevant regulator or agency of competent jurisdiction or court of competent jurisdiction, and the

See supra note 8 and accompanying text.

An automated response or acknowledgement or other communication that does not address the status of the

referral would not be considered a response for these purposes.

Proposed Rule 2165(b)(5)(A).

Proposed Rule 2165(b)(5)(B) (stating that members must “provide notification of the extension of the

temporary hold, the reason for the extension, and the potential for the extension to last 90 business days” to

the trusted contact person(s) and all parties authorized to transact business on the account, unless a party is

unavailable or the member reasonably believes that the party has engaged, is engaged, or will engage in the

financial exploitation of the Specified Adult).

Currently, Rule 2165 requires notification of the hold and the reason for the hold to authorized parties and

the trusted contact person within two business days of placing the hold. FINRA is proposing to amend this

requirement to also require information about how the member can be contacted for questions or concerns.

See proposed Rule 2165.06.

member’s continuing belief of financial exploitation.24 In accordance with proposed Rule

2165.05, documentation of follow-up efforts with the relevant regulator, agency or court of

competent jurisdiction “shall include dates of communication attempts, methods used, and any

communications received.”25 Member firms would also be required to maintain records

demonstrating that they made reasonable efforts to determine the status of the referred matter.26

As discussed below, at any time, if the relevant authority requests an extension, the member firm

would be permitted to continue the hold outside of the structured time periods.27

This balanced approach provides for longer holds in complex cases while maintaining the

integrity of the existing temporary hold framework through a clearly defined process.

Reporting Financial Exploitation to Federal Authorities

Currently, Rule 2165 permits a temporary hold to be extended if the member firm has

provided notification of the member firm’s reasonable belief of financial exploitation to a state

regulator or agency of competent jurisdiction or a court of competent jurisdiction. In recognition

of the multi-jurisdictional nature of many instances of financial exploitation and potential

avenues at the federal level for investigation and redress, FINRA proposes to expand existing

references in Rule 2165(b)(2)–(4) and 2165(d) to expressly include a federal regulator or federal

agency of competent jurisdiction, and include these references in the proposed new provisions.28

Proposed Rule 2165(d)(7). In circumstances where the member receives no communication from the

relevant authority, documentation of a lack of response could include a notation or attestation that no

response was received from the relevant authority as of a specified date.

Proposed Rule 2165.05.

See supra note 25.

See proposed Rule 2165(b)(2)–(4) (“unless otherwise terminated or extended by a federal or state regulator

or agency of competent jurisdiction or a court of competent jurisdiction”) and proposed Rule 2165.04; see

infra Item II.A.1.III.D.

See, e.g., Board of Governors of the Federal Reserve System et al., Interagency Statement on Elder

Financial Exploitation at 7 (December 2024) (“Some agencies or programs may be able to help victims

recover stolen funds. For example, the IC3 Recovery Asset Team is a domestic program designed to

‘streamline communication between financial institutions and assist FBI field offices with the freezing of

Individuals Authorized to Place, Extend or Terminate a Hold

Pursuant to existing Rule 2165(c)(2), a member firm’s written supervisory procedures

must identify the title of each person authorized to place, terminate or extend a temporary hold

on behalf of the member firm. Such individuals must be associated persons who serve in a

supervisory, compliance or legal capacity for the member firm.

To facilitate the administration of the temporary hold provisions by member firm

personnel who do not serve in a supervisory, compliance or legal capacity but who have relevant

expertise and day-to-day responsibilities, FINRA proposes a limited expansion of the types of

individuals whom a member firm can authorize to place, terminate or extend a temporary hold.

The proposed addition of Rule 2165(c)(2)(B) would cover associated persons who serve in “a

specialized senior investor protection or fraud prevention role with responsibilities that include,

as appropriate, investigating, evaluating, escalating, and reporting potential financial exploitation

of Specified Adults.”

Codifying Guidance Articulated in Frequently Asked Questions

For clarity, FINRA proposes to largely codify existing guidance articulated in two

Frequently Asked Questions (“FAQs”). First, pursuant to proposed Supplementary Material .04,

a member firm may extend a temporary hold beyond the periods specified in Rule 2165 upon the

request of a federal or state regulator or agency of competent jurisdiction or court of competent

jurisdiction, and that request need not be in the form of a formal order or in writing,29 so long as

funds for those who made transfers to fraudulent accounts under false pretenses.’ Another example is

FinCEN’s international Rapid Response Program that ‘helps victims and their financial institutions recover

funds stolen as the result of certain cyber-enabled financial crime schemes, including business e-mail

compromise.’”) (citations omitted).

To the extent a member receives an oral request from the relevant authority, the member would be expected

to create a record of such communication and maintain it in accordance with proposed Rule 2165.04.

the member firm maintains a record of the authority’s request.30 Accordingly, if a relevant

authority indicates to a member firm, by telephone, email or otherwise, that additional time is

needed to address a reported matter, the member firm may extend the hold and retain a record of

the request.

Second, pursuant to proposed Supplementary Material .07, a member firm may place

restrictions on an entire account rather than a particular disbursement or transaction when the

member firm has a reasonable belief of financial exploitation, has procedures reasonably

designed to permit legitimate transactions and disbursements (e.g., regular bill payments), and

permits such legitimate transactions or disbursements.31 The provision makes clear that a

member firm may not avail itself of the Rule 2165 safe harbor if it blocks transactions or

See FINRA Seniors FAQs, supra note 7, at Q.3.2 (“May a member extend a temporary hold beyond the

period indicated in Rule 2165 if a state agency, such as adult protective services, securities regulator, or

other state agency or regulator, asks a member to extend a temporary hold so that it has more time to

investigate the matter or does the state agency need to issue a formal order? In addition, would the member

need to report the agency’s request to FINRA? Rule 2165 allows a member to extend a temporary hold

upon a state agency’s request to do so. The state agency would not have to issue a formal order. In

addition, Rule 2165 does not require a member to report a state agency’s request to FINRA. However, the

member would need to maintain a record of the state agency’s request.”).

See FINRA Seniors FAQs, supra note 7, at Q.1.2. (“Under Rule 2165, may a member that has a reasonable

belief of financial exploitation of a Specified Adult regarding a transaction or disbursement place a

temporary hold or restrictions on an entire account if the member permits legitimate disbursements from

the account? Where a questionable transaction or disbursement involves less than all assets in an account,

a member should not place a blanket hold on the entire account. Each transaction or disbursement should

be analyzed separately. In addition, where a transaction or disbursement at issue involves all of the assets

of the account (e.g., an ACATS transfer request), the member must permit transactions or disbursements

from the account where there is not a reasonable belief of financial exploitation regarding such

disbursements (e.g., regular bill payments). FINRA understands that some members intend, for operational

reasons, to place a temporary hold or restrictions on an entire account when they have a reasonable belief of

financial exploitation regarding a transaction or disbursement from the account, but also intend to permit

legitimate transaction or disbursement from the account in these circumstances. FINRA believes that

placing a temporary hold or restrictions on an entire account but allowing legitimate transactions or

disbursements from the account is consistent with Rule 2165 and members may proceed in such a manner

as long as they have procedures reasonably designed to permit legitimate transactions and disbursements.

FINRA emphasizes that a member may not avail itself of the Rule 2165 safe harbor if it blocks transactions

or disbursements where there is not a reasonable belief of financial exploitation regarding such transactions

or disbursements.”).

disbursements where there is not a reasonable belief of financial exploitation regarding such

transactions or disbursements.32

Protection of Customer Assets

FINRA recognizes that member firms may hold crypto assets for customers, such as

payment stablecoins regulated by the GENIUS Act.33 FINRA therefore proposes to change the

current terminology of “funds or securities” to “funds, securities, or other assets” throughout

Rule 2165, and use this same terminology in proposed Rule 2166 (discussed below), to clarify

that Rule 2165 and proposed Rule 2166 would permit member firms to protect any customer

assets that may be held with the member, including payment stablecoins.

IV.

Proposed New Rule 2166

Background

The proliferation of fraud and scams targeting individuals of all ages and the evolution of

fraud tactics have heightened a need for protective measures that extend beyond the current

Specified Adult criteria in Rule 2165. To offer member firms a tool to protect all customers

(regardless of age or capacity) from fraud, FINRA is proposing to adopt new Rule 2166.

Proposed Rule 2166 is modeled on Rule 2165 and similarly offers an optional safe harbor

approach—but in a more streamlined fashion—with a “speed bump” mechanism distinct from

the longer-term holds available under Rule 2165 for Specified Adults. Specifically, proposed

Rule 2166 would permit a member firm to place a temporary delay of up to 10 business days on

See proposed Rule 2165.07.

See Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-27, 139 Stat.

419 (2025) (establishing federal guidelines for the use of stablecoins in financial markets).

a transaction or disbursement in the account of a customer34 if there is a reasonable belief of

fraud35 targeting the customer, with associated safeguards.36

Proposed Rule 2166 is designed to prevent customer losses by giving member firms a

brief intervention window to facilitate outreach by the member firm to the customer (away from

perpetrator influence). This brief intervention window would also facilitate outreach by the

member firm to authorized parties and trusted contact persons, if the member chooses to do so.

Further, it would facilitate information gathering, conversation and provision of relevant

educational resources about fraud schemes. During that intervention window, a member firm

could attempt to persuade the customer to recognize the attempted fraud and not proceed with

the transaction or disbursement.

The FBI explains that “[o]ne of the most common tactics scammers employ is a false

sense of urgency or isolation” and for this reason, the FBI “urges the public to ‘Take A Beat’:

resist pressure to act quickly, pause for a moment, and assess the situation.”37 Using a

For purposes of this rule, “customer” would mean “a natural person age 18 and older.” Proposed Rule

2166(a)(2). “Account” would mean “any account of a member for which a customer has the authority to

transact business.” Proposed Rule 2166(a)(1). Customers who meet the definition of “Specified Adult”

under Rule 2165 may be protected by a member under either Rule 2165 or proposed Rule 2166. FINRA

notes that a “mental or physical impairment that renders the individual unable to protect his or her own

interests” can apply to temporary impairments (e.g., due to addiction or temporary illness) as well as

permanent or chronic impairments. See Securities Exchange Act Release No. 79215 (November 1, 2016),

81 FR 78238, 78246 (November 7, 2016) (Notice of Filing of File No. SR-FINRA-2016-039). In the

context of placing a temporary delay in the account of a customer under the age of 65, if the member forms

a reasonable belief that the customer has such a mental or physical impairment, the member could choose

to rely instead on Rule 2165.

For purposes of this rule, “fraud” would be defined as “a deceptive scheme perpetrated by a third party that

targets a customer and results in a request for a disbursement of funds, securities, or other assets or a

transaction in securities based on false or misleading information.” Proposed Rule 2166(a)(4).

Like Rule 2165, proposed Rule 2166 would provide members and their associated persons with a safe

harbor from FINRA Rules 2010, 2150 and 11870 when acting in accordance with the requirements of the

rule.

See FBI, FBI Announces Nationwide ‘Take A Beat’ Campaign to Increase Awareness of Frauds and Scams

(August 19, 2024) (noting that perpetrators “may try to instill trust, induce empathy, or fear, or promise

monetary gains, companionship, or employment opportunities—all to lure victims into immediate action.”).

permissible “speed bump” or “cooling off period” of this type is consistent with this FBI fraud

and scam awareness campaign, and is supported by research suggesting that emotional stimulus

can increase susceptibility to fraud.38 Other research indicates that awareness about specific

scams can help protect against financial loss.39 Accordingly, the ability to pause a transaction or

disbursement and educate the customer about the specific type of suspected fraud or scam could

help prevent fraud losses. FINRA offers a set of resources in its online Member Firm Hub,

including Investor Education Resources and Scam Prevention & Assistance Resources.40 These

Key Topic pages provide consolidated resources that member firms and registered professionals

can use or share with their customers.

Overview of Proposed New Rule 2166, Including Key Safeguards

Proposed Rule 2166 establishes a “speed bump” mechanism, distinct from the longerterm holds available under Rule 2165 for Specified Adults, which would permit a member firm

to place a temporary delay of up to 10 business days on a transaction or disbursement in the

account of a customer if there is a reasonable belief of fraud targeting the customer, with

See Katharina Kircanski et al., Emotional Arousal May Increase Susceptibility to Fraud in Older and

Younger Adults, 33(2) Psychol. & Aging 325–337 (March 2018) (“Persuasion tactics used by fraud

perpetrators often elicit high levels of emotional arousal; thus, studying emotional arousal may help to

identify the conditions under which individuals are particularly susceptible to fraud. We examined whether

inducing high-arousal positive (“HAP”) and high-arousal negative (“HAN”) emotions increased

susceptibility to fraud. . . . For participants who exhibited the intended induced emotional arousal, both the

HAP and HAN conditions . . . significantly increased participants’ reported intention to purchase falsely

advertised items.”).

See Marguerite DeLiema, Yiting Li & Gary Mottola, Correlates of responding to and becoming victimized

by fraud: Examining risk factors by scam type, 47(3) Int’l J. of Consumer Stud. 1042-1059 (May 2023)

(“Using survey data from 1375 American and Canadian consumers who previously reported a scam to a

North American consumer complaint organization, this study examines the correlates of responding to and

losing money to four categories of consumer fraud: opportunity-based scams, threat-based scams,

consumer purchase scams, and phishing scams. . . . Having advance knowledge of fraud prior to being

exposed was protective across nearly all scam types. Results suggest that awareness about specific scams

helps protect against financial loss.”).

FINRA, Member Firm Hub: Customer Resources, https://www.finra.org/member-firm-hub.

associated safeguards. The definition of “fraud” in Proposed Rule 2166 is intended to be broad

and would include, for example, identity theft and account takeovers.41

The rule contains safeguards modeled on similar provisions in Rule 2165 to protect

customers and prevent misapplication of the rule:

•

Proposed Rule 2166(b)(1)(A): The member firm may only place the temporary delay if

the member firm reasonably believes that fraud has occurred, is occurring, has been

attempted, or will be attempted.

•

Proposed Rule 2166(b)(1)(B) and 2166.04: Not later than two business days after placing

a temporary delay, the member firm must provide notification, which may be oral, to the

customer42 of the temporary delay, the reason for the delay, and how the member firm

can be contacted with questions or concerns.43 Member firms may choose to also notify

other authorized parties and trusted contact persons.

•

Proposed Rule 2166(b)(2): The temporary delay would expire no later than 10 business

days after the date that the member firm first placed the temporary delay, unless

otherwise terminated or extended by a federal or state regulator or agency of competent

jurisdiction or a court of competent jurisdiction.

See supra note 35.

Under Rule 2165, within two business days of placing a hold, a member must notify all parties authorized

on the account and the trusted contact. See Rule 2165(b)(1)(B). For purposes of the more streamlined

approach in proposed Rule 2166, FINRA is proposing to require notification to the customer, while

permitting member firms to choose whether to also notify other authorized parties or trusted contact

persons.

See proposed Rule 2166(b)(1)(B) and 2166.04. FINRA understands that a member firm may not

necessarily be able to speak with or otherwise obtain a response from the customer within the twobusiness-day period. Consistent with guidance provided in connection with Rule 2165, FINRA would

consider, for example, a member firm’s sending an email to a customer’s email address on file with the

firm or placing a telephone call and leaving a message with the customer within the two-business-day

period to constitute notification for purposes of proposed Rule 2166. See Regulatory Notice 17-11 at n.20

(March 2017). A member firm may similarly mail a letter, but due to the short duration of the temporary

delay in proposed Rule 2166, delivery by mail may not be the most expedient means of communication.

•

Proposed Rule 2166(c) and 2166.02: The rule would impose supervision and training

requirements consistent with Rule 2165 (as proposed to be amended).

•

Proposed Rule 2166(d): The records requirement would be generally consistent with Rule

2165(d) (as proposed to be amended).44 Proposed Rule 2166(d) would require member

firms to retain records of requests for disbursements or transactions that may constitute

fraud and the resulting temporary delay, the basis for the reasonable belief of fraud, the

name and title of the associated person who authorized the temporary delay, notification

to relevant parties, any information provided to the customer in connection with the

temporary delay, and information regarding any communications with or by a federal or

state regulator or agency or court of competent jurisdiction.

Proposed Rule 2166 seeks to balance investor protection with respect for customer

autonomy. It complements Rule 2165 by addressing situations where customers of any age and

capacity are targeted by fraud. The differences between Rule 2165 and proposed Rule 2166

recognize that there are some factors that may be unique to senior investors, such as the

existence of agencies focused on combating financial exploitation of seniors (e.g., APS). The

longer hold periods in Rule 2165 provide the member firm with the time needed to gather

information that can form the basis of a referral to such agency, and the time an agency may

need to evaluate the matter and conduct its investigation. The length of the Rule 2165 hold

period also recognizes the severity of the consequences for seniors who experience financial

exploitation, as discussed above. Those same considerations and resources do not necessarily

exist for fraud perpetrated on other types of investors.45

Proposed Rule 2166(d) would not include the specific records requirements that are related to unique

aspects of Rule 2165 concerning internal review and extensions of the temporary hold period.

Under both Rule 2165 and proposed Rule 2166, member firms have the ability to coordinate with relevant

parties, as appropriate, to prevent or address customer harm. In addition, Section 314(b) of the USA

Applying Proposed New Rule 2166 in Practice

FINRA understands that some member firms currently rely on contractual provisions in

their account opening agreements to place holds on transactions or disbursements to protect

customers from fraud. In some cases, these holds may exceed 10 business days. The optional

safe harbor under proposed Rule 2166 would offer a structured framework for member firms

(including those that do not currently have such contractual provisions) under FINRA rules,

without restricting a member firm’s ability to pursue contractual approaches.46

As with Rule 2165, Supplementary Material .01 to proposed Rule 2166 makes clear that

the rule does not require member firms to place temporary delays.47

Consistent with proposed Supplementary Material .07 in Rule 2165, pursuant to

Supplementary Material .05 in proposed Rule 2166, a member firm may place restrictions on an

entire account rather than a particular disbursement or transaction when the member firm has a

reasonable belief of fraud regarding a transaction or disbursement from the account, has

PATRIOT Act and its implementing regulation provide financial institutions with the ability, upon

providing notice to the U.S. Department of the Treasury, to share information with one another, under a

safe harbor that offers protections from liability, for purposes of identifying and, where appropriate,

reporting activities that may involve possible terrorist activity or money laundering, which may include

information about fraud and other specified unlawful activities. See 31 CFR 1010.540 (Voluntary

information sharing among financial institutions) regarding the requirements that must be met to qualify for

the safe harbor from liability. In June 2026, FinCEN issued updated guidance on information sharing

under Section 314(b) through a fact sheet that further clarified: (1) the permissibility of real-time

information sharing under Section 314(b) of the USA PATRIOT Act; (2) under what circumstances

information, including related to fraud, can be shared; and (3) how information can be shared. See

FinCEN, Section 314(b) Fact Sheet (June 12, 2026),

https://www.fincen.gov/system/files/shared/314bfactsheet.pdf. See also supra note 28; FinCEN Rapid

Response Program Fact Sheet (April 15, 2026), https://www.fincen.gov/system/files/202604/RRPFactSheet.pdf; FBI Cyber, International Kill Chain Process,

https://www.justice.gov/elderjustice/media/1364056/dl?inline.

See also Regulatory Notice 22-05 at n.13 (February 2022) (“Regarding whether the best execution

obligation applies to a member firm’s decision to place a temporary hold on a securities transaction where

there is a reasonable belief of customer financial exploitation, ‘[b]roker-dealers are reminded that nothing

under the federal securities laws or FINRA rules obligates them to accept an order where they believe that

the associated compliance or legal risks are unacceptable.’”) (citing SEC, Staff Bulletin: Risks Associated

with Omnibus Accounts Transacting in Low-Priced Securities (last updated October 17, 2023)).

See proposed Rule 2166.01.

procedures reasonably designed to permit legitimate transactions and disbursements (e.g., regular

bill payments), and permits such legitimate transactions or disbursements from the account in

these circumstances. The provision makes clear that the member firm may not rely on the safe

harbor if it blocks transactions or disbursements where there is not a reasonable belief of fraud

regarding such transactions or disbursements.

Conforming Change to Rule 0150

FINRA proposes amending Rule 0150(c) to add proposed new Rule 2166 to the list of

rules applicable to transactions in, and business activities relating to, exempted securities, except

municipal securities, conducted by member firms and associated persons.

If the Commission approves the proposed rule change, FINRA will announce the

effective date of the proposed rule change in a Regulatory Notice.

Statutory Basis

FINRA believes that the proposed rule change is consistent with the provisions of Section

15A(b)(6) of the Act,48 which requires, among other things, that FINRA rules 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 changes are designed to enhance member firms’ ability to prevent and

address financial exploitation of senior and vulnerable investors and fraud impacting investors of

all ages.

The proposed changes to Rule 4512, including the ability for member firms to use the

term “emergency contact” as an alternative to “trusted contact person,” aim to increase customer

understanding and adoption of this safeguard to help protect investors from fraud and financial

15 U.S.C. 78o-3(b)(6).

exploitation, help member firms update contact information when a customer becomes

unavailable, assist when concerns arise over possible diminished capacity or other health issues,

and protect assets.

The proposed limited expansion of the time period in Rule 2165 would allow additional

time for APS agencies, law enforcement, and state and federal regulators to assess referrals of

suspected financial exploitation, determine whether to investigate, and, where relevant,

communicate to member firms that additional time will be needed to investigate or resolve a

matter. The additional proposed changes to Rule 2165 are intended to provide member firms

clarity and flexibility in applying this critical investor protection tool. Ultimately, the purpose of

these proposed changes is to further empower member firms to help protect senior and

vulnerable investors from experiencing unrecoverable losses due to financial exploitation.

Proposed new Rule 2166 is designed to provide member firms with an additional investor

protection tool that would be available to any customer, regardless of age or capacity. The

proposed new rule would enable member firms to place temporary delays of up to 10 business

days on transactions and disbursements where there is a reasonable belief of fraud, during which

time member firms can communicate with customers to alert them of suspected fraud and

ultimately prevent unrecoverable fraud losses from occurring.

The proposed rule changes incorporate numerous conditions and important safeguards

that apply to each temporary hold or delay and are designed to protect investors against

misapplication of the rules.

Self-Regulatory Organization’s 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 analyze the

economic baseline for the proposed rule change and their potentially significant economic

impacts, including anticipated costs and benefits, relative to the baseline, and the alternatives

considered in assessing how best to meet FINRA’s regulatory objectives.

(a)

Regulatory Need

Advances in technology and use of sophisticated tactics have made fraud a significant

and growing risk for investors and member firms. While investors of all ages face a significant

risk of fraud, senior investors are often living on fixed incomes and budgets without the ability to

offset significant losses over time. The proposed rule amendments would enhance the tools that

member firms have to fight fraud and financial exploitation of senior and vulnerable adult

investors, and to protect other investors where there is a reasonable suspicion of fraud.

(b)

Economic Baseline

The economic baseline includes current Rules 4512 and 2165, which assist member firms

in protecting customer assets through trusted contact persons and, for Specified Adults, the

ability to place temporary holds on disbursements and transactions when there is a reasonable

belief of financial exploitation. The economic baseline also includes current industry practices

relating to compliance with these provisions and relevant state laws as well as current risks of

fraud and financial exploitation of individuals who are not Specified Adults. The proposed rule

change would mostly affect member firms with retail operations. As of December 31, 2025,

there are at least 1,088 member firms that serve retail investors.

Survey data from FINRA’s current National Financial Capability Study Report indicate

that about 42 percent of investors have authorized a trusted contact person for their investment

accounts.49 Among those investors who do not have a trusted contact person, 81 percent do not

recall being asked to name one and 49 percent indicated that they would be willing to do so.50

Regarding temporary holds, FINRA conducted a survey of member firms in 2020. At

that time, FINRA found that “[a]pproximately 53 percent of survey respondents stated that they

had been unable to resolve a matter within the 25-business day period.”51 Furthermore, “[f]or

matters that took longer to resolve than the 25-business day period, approximately 35 percent of

survey respondents indicated that it took on average 26–50 days to resolve the matter and

approximately 59 percent of survey respondents indicated that it took on average 51–100 days to

resolve the matter.”52

(c)

Economic Impacts

The proposed amendments would impact member firms and investors, especially senior

and vulnerable investors. As discussed above, FINRA is proposing amendments in three areas:

(1) amendments to Rule 4512, allowing the use of “emergency contact” terminology under the

existing trusted contact framework to reduce customer confusion, and codifying existing

guidance; (2) amendments to Rule 2165, including extending maximum temporary hold periods

and codifying existing guidance; and (3) proposing new Rule 2166 that introduces a new

See National Financial Capability Study, supra note 4, at 21.

See National Financial Capability Study, supra note 4, at 22.

See Regulatory Notice 20-34 at 5 (October 5, 2020).

See supra note 51.

temporary delay mechanism for addressing suspected fraud, applicable to any customer

(regardless of age or capacity).

Anticipated Benefits

FINRA believes that the proposed rule change to Rule 4512 allowing the use of the term

“emergency contact” as an alternative to “trusted contact person” would increase customer

comfort with designating an individual as a trusted contact person. FINRA also believes that an

increase in customer use of this designation would improve member firms’ ability to intervene in

situations of suspected fraud or other circumstances of potential investor harm. This would

subsequently improve the chances to prevent potential financial losses to investors.

FINRA believes that the proposed rule change to Rule 2165 would better address the fact

that, in a significant number of instances, relevant authorities, such as APS or law enforcement,

require more than the current maximum of 55 business days to evaluate or address financial

matters. The data from the 2020 FINRA member firm survey discussed above suggest that about

28 percent of member firms face instances where a matter took more than 50 days to resolve.

The data also suggest that the majority of matters are resolved within the current maximum of 55

business days.

The proposed rule change would establish a structured framework to extend temporary

holds up to a maximum of 145 business days (absent further extension by the relevant authority)

and provide a mechanism whereby the extension of a hold is commensurate to the circumstances.

The more flexible structured framework is expected to benefit investors by allowing, when

needed, for more time to address situations where fraud or other circumstances of potential

investor harm may be occurring. The proposed rule change strikes a balance between addressing

circumstances where there is a demonstrated need for longer holds and avoiding overly long

holds or misuse.

The newly proposed Rule 2166 would expand temporary hold protections to cover not

only senior and vulnerable investors, but all investors. It would do so by introducing an optional

safe harbor for member firms to place a temporary delay of up to 10 business days on

disbursements or transactions when there is a reasonable belief of fraud targeting a customer,

without restricting a member firm’s ability to include contractual provisions in their account

opening agreements to place holds or delays to protect customers from fraud. The proposed rule

change would benefit investors by allowing member firms to intervene in situations of suspected

fraud and thereby potentially prevent financial losses to investors, especially if relevant

information can be effectively communicated to investors within 10 business days. Accordingly,

the expected benefits from the proposed rule change would be greatest where the member firm

maintains awareness of common fraud schemes and knows the customer, including how to

effectively communicate with them. The proposed rule change benefits member firms by

providing them with safe harbor protection from specified FINRA rules if they meet the terms of

the rule when implementing a delay of up to 10 business days on disbursements or transactions.

Anticipated Costs

Allowing member firms to use the term “emergency contact” as an alternative to “trusted

contact person” would result in negligible additional costs if they choose to use the “emergency

contact” terminology. Member firms may incur some minor costs in updating materials that

reference “trusted contact person,” such as written supervisory procedures, training materials and

account opening agreements.

To the extent that member firms choose to take advantage of the proposed amendments to

Rule 2165 as well as proposed Rule 2166, additional operational costs such as additional

personnel time for communicating with relevant authorities, notifying relevant parties of hold

extensions or temporary delays, and enhanced recordkeeping efforts may result. Additionally,

member firms would need to update their written supervisory procedures and develop training

programs to implement the new provisions.

In addition, there could be indirect costs to member firms and investors in situations

where longer temporary holds under Rule 2165 or Rule 2166-based delays are implemented.

The possibility exists that the imposition of a temporary hold or delay might cause lost or

diminished investment opportunities and dissatisfaction with customer service by some

investors. These costs would likely increase with the length of time of the hold. Some investors

may view temporary holds or delays as impositions on their autonomy that exceed any benefits

resulting from better fraud protection. In some instances, this may prompt some investors to

move assets, which would impose costs on them. For member firms, this could result in lost

business and diminished client relationships. In addition, if time-sensitive disbursements or

transactions are affected by such holds or delays, there may be missed opportunities or other

disruptions to the investor. While acknowledging the possibility of member firms and investors

incurring the various indirect costs discussed above, FINRA is unable to gauge their magnitude.

Conversely, in situations where proposed Rule 2166 would apply but member firms

choose not to place a temporary delay, there is the possibility that member firms expose

themselves to the risk of customer complaints and legal action. FINRA believes that a legal risk

exists whether or not FINRA adopts the proposed rule, and the safe harbor approach

appropriately balances investor protection with member firm liability concerns when member

firms act in good faith.

Competitive Effects

FINRA believes the competitive effects of the potential amendments would differ across

the impacted member firms, depending on their business model and composition of their

customer base and whether and to what extent they choose to use the tools the proposed rule

change offer. For example, the competitive effects from the proposed rule change would depend

in part on the extent to which a member firm already has business practices in place that

facilitate the detection of potential fraud and responses to it. The ability to introduce a 10business-day delay, based on proposed Rule 2166, may be more useful to member firms with

full-service business models than to others. Some member firms may not see much advantage

from this additional tool and may instead see mostly risks of additional customer complaints and

legal action. Other member firms that currently rely on contractual agreements governing

temporary holds (irrespective of customer age) may be indifferent. To the extent that member

firms make their practices regarding these tools known to current and prospective customers,

member firms may attract additional investors for whom such practices and protections are

especially important and salient.

The competitive impact of the proposed rule change on member firms versus nonmember firms, such as investment advisory firms, is unclear.

(d)

Alternatives Considered

With respect to the appropriate maximum length of delay under proposed Rule 2166,

FINRA considered whether five business days would be preferable to 10 business days. With

five business days, the potential cost to the investor resulting from missed investment

opportunities could be reduced. However, a shorter maximum of five business days would also

decrease member firms’ ability to collect information, reach the customer, reach the trusted

contact person or other authorized parties (if the member firm chooses to), and possibly schedule

in-person meetings. Based on commenter feedback that a maximum of five business days may

be inadequate to allow member firms to effectively make use of the “speed bump,” FINRA is

proposing a 10-business-day delay.

While FINRA is proposing to address financial exploitation of non-Specified Adults

through proposed Rule 2166, FINRA had alternatively considered expanding existing Rule 2165

to cover non-Specified Adults. Relative to expanding Rule 2165, the proposed approach avoids

potential disruption of existing member firm practices geared specifically to Specified Adults.

Moreover, while for Specified Adults there are agencies with mandates to investigate financial

exploitation (e.g., APS), the same is not necessarily true for fraud perpetrated on non-Specified

Adults.53 Hence, while the hold periods in Rule 2165 provide member firms the time needed to

gather information that can form the basis of a referral to such agencies, and the time an agency

may need to conduct its investigation, similar considerations do not necessarily exist for nonSpecified Adults.

Self-Regulatory Organization’s Statement on Comments on the Proposed Rule

Change Received from Members, Participants, or Others

In January 2026, FINRA published Regulatory Notice 26-02 (the “Notice”), requesting

comment on the proposed rule change (the “Notice Proposal”). FINRA received 26 comments in

response to the Notice. A copy of the Notice is available on FINRA’s website at

See supra note 45.

http://www.finra.org. A list of the commenters in response to the Notice and copies of the

comment letters received in response to the Notice are also available on FINRA’s website.54

Most commenters expressed support for FINRA’s efforts to provide member firms with

additional tools to protect senior and vulnerable investors from financial exploitation and all

investors from fraud; however, some commenters opposed aspects of the proposal. Several

commenters supported particular aspects of the Notice Proposal, including the proposed

amendments to the trusted contact person framework, the proposed extension of the maximum

temporary hold period under Rule 2165, and the adoption of proposed Rule 2166. Some

commenters requested clarifications or modifications concerning, among other things, the

reasonable belief standard, the length and conditions of temporary holds and delays, notification

requirements, the use of trusted or emergency contacts, the treatment of customer complaints

arising from temporary holds, the interaction of proposed Rule 2166 with contractual hold

authority and account transfer requirements, and customer redress mechanisms. A summary of

the comments and FINRA’s response is set forth below.

Trusted Contact Amendments under Rule 4512

The proposed amendment to Rule 4512 would give member firms the option to use the

term “emergency contact” as an alternative to “trusted contact person.” This aspect of the

proposal received nearly universal support55 with only Pittsburgh Law Clinic opposing the

change and Long & Mierswa requesting additional flexibility for the use of other similar

terminology. For example, supporters stated that customers may view “trusted contact” as akin

See SR-FINRA-2026-018 (Form 19b-4, Exhibits 2b and 2c) (available on FINRA’s website at

http://www.finra.org). For a list of abbreviations assigned to commenters, see SR-FINRA-2026-018, Form

19b-4, Exhibit 2b.

Apex; ASA; CAI; Cambridge; Cardozo Law Clinic; CFP, FPA & NAPFA; Commonwealth; DFPG;

Fidelity; FSI; Hicks & Loeffel; Long & Mierswa; LPL; Mustico; NASAA; Robinhood; SIFMA; St. John’s.

to “trustee,” a term that many associate with a loss of control over their account(s).56 In contrast,

supporters agreed that the term “emergency contact” is more universally understood than

“trusted contact person” because “emergency contact” is known to many “main street”

investors57 and often used in other contexts such as healthcare, employment and education.58

Pittsburgh Law Clinic opposed this proposed amendment, citing medical research showing

patients routinely misunderstand emergency medical contacts and assume they have decisionmaking authority. Some commenters urged enhanced disclosure and more frequent confirmation

of trusted contact person information.59

FINRA continues to believe that providing member firms the flexibility to use the term

“emergency contact” as an alternative to “trusted contact person” would address practical

concerns raised by member firms that some customers are unfamiliar with or hesitant about the

term “trusted contact person.” FINRA believes that permitting the use of the term “emergency

contact” would increase familiarity with and use of this important tool. FINRA will continue to

consider additional ways to educate investors on this topic and encourages member firms to do

so as well.60

FINRA believes that permitting the use of two key terms: “trusted contact person” and

“emergency contact” would promote predictability and increase familiarity with the role.

CFP, FPA & NAPFA; Long & Mierswa; St. John’s.

ASA.

CFP, FPA & NAPFA; LPL; NASAA.

Cardozo Law Clinic; CFP, FPA & NAPFA; NASAA; PIABA.

FINRA notes that under Rule 4512.06, “at the time of account opening a member shall disclose in writing,

which may be electronic, to the customer that the member or an associated person of the member is

authorized to contact the trusted contact person and disclose information about the customer’s account to

address possible financial exploitation, to confirm the specifics of the customer’s current contact

information, health status, or the identity of any legal guardian, executor, trustee or holder of a power of

attorney, or as otherwise permitted by Rule 2165.” Such disclosure may also help to educate customers

about the benefits of naming a trusted contact.

FINRA does not believe providing additional flexibility for the use of other terms is appropriate

at this time, as it could create confusion about the trusted contact person’s role and could have

the unintended consequence of decreasing familiarity with and use of this important tool.

Several commenters suggested that FINRA consider allowing firms to request customers

to designate more than one trusted contact person because a single contact may be unavailable,

unreachable or otherwise unable to assist in some circumstances.61 To clarify that this is

permissible, FINRA has proposed a minor amendment to Rule 4512.06 as described above.62

The proposed amendment would also permit member firms to seek a customer’s

authorization to apply a trusted contact person to such customer’s existing and future accounts

with the member firm, provided that the customer is offered the choice to assign the trusted

contact person on an account-by-account basis rather than to all accounts. This aspect of the

proposal also received strong support.63 For example, DFPG stated that managing trusted

contact person information on an account‑by‑account basis can be operationally burdensome to

member firms and confusing and burdensome for customers, particularly as they establish new

accounts. DFPG further stated that allowing customers to authorize the application of trusted

contact person information to all current and future accounts eases these burdens and maximizes

trusted contact coverage, thereby reducing the risk of fraud and exploitation.

While SIFMA supported the proposed flexibility for a customer to name a trusted or

emergency contact for use across all the customer’s accounts at the member firm, SIFMA

requested that FINRA clarify that a firm can choose whether to provide customers the option to

See CFP, FPA & NAPFA; Mustico; NASAA.

See supra note 18 and accompanying text.

Apex; CAI; CFP, FPA & NAPFA; DFPG; Fidelity; FSI; Long & Mierswa; LPL; PIABA; Robinhood;

SIFMA; St. John’s.

appoint a trusted contact person at either the customer or account level only. SIFMA stated that

requiring firms to adopt a hybrid approach on a customer-by-customer basis could impose

significant technological and substantive challenges that could run counter to the purpose of this

change.

Proposed Supplementary Material .06(d) is intended to clarify existing guidance and offer

additional flexibility. Member firms may choose whether to offer their customers the ability to

authorize the application of their trusted contact person information to all of the customer’s

accounts. However, if a member firm chooses to do so, it must offer customers the choice to

assign trusted contact person(s) on an account-by-account basis rather than to all accounts. This

approach seeks to provide additional flexibility for member firms and to appropriately balance

operational concerns with investor autonomy.64

However, NASAA cautioned that while flexibility to seek a customer’s authorization to

apply a trusted contact person to such customer’s existing and future accounts with the member

may be beneficial, members should not be permitted to obtain a single authorization of a trusted

contact person at the outset that would apply broadly and indefinitely to all future accounts,

without periodically confirming that this remains the customer’s intent. NASAA suggested that

FINRA consider requiring firms to request confirmation or updates to trusted contact person

information at least annually or, at a minimum, FINRA should consider providing guidance to

encourage firms to issue periodic reminders prompting customers to review and maintain current

trusted contact person information.

Although some customers may prefer to appoint a single trusted contact person for all accounts, other

customers may prefer to appoint different trusted contact persons for different accounts (e.g., a customer

prefers one trusted contact person for their personal account and a different trusted contact person for a

joint account).

FINRA notes that Rule 4512 requires members to seek to update the trusted contact

information for those accounts subject to the requirements in Exchange Act Rule 17a-3.

Specifically, Supplementary Material .06(c) to Rule 4512 provides that with respect to any

account subject to the requirements of Exchange Act Rule 17a-3(a)(17) to periodically update

customer records, a member is required to make reasonable efforts to obtain or, if previously

obtained, to update where appropriate the name of and contact information for a trusted contact

person consistent with the requirements in Exchange Act Rule 17a-3(a)(17). Consistent with

prior guidance, FINRA continues to believe that, with regard to updating the contact information

for other accounts that are not subject to the requirements in Exchange Act Rule 17a-3, a

member should consider asking the customer to review and update the name of and contact

information for a trusted contact on a periodic basis or when there is a reason to believe that

there has been a change in the customer’s situation.65

CFP, FPA & NAPFA recommended that FINRA further amend Rule 4512 to require

firms to either have customers designate a trusted contact person or have customers affirmatively

opt out of the framework after they have been informed of the benefits of listing a trusted contact

person. FINRA believes firms should retain flexibility in designing their trusted contact program

implementation rather than mandating a specific opt-out mechanism. Providing firms with

implementation flexibility would allow them to innovate and develop effective approaches

tailored to their business models, customer bases, and operational capabilities.66

Rule 2165 Amendments

See FINRA Seniors FAQs, supra note 7, at Q.4.4.

For example, FINRA has observed members promoting effective ways of asking for trusted contact person

information to increase likelihood of a designation, such as requiring a “yes” or “no” response to the trusted

contact person question in account opening forms or asking, “Who is your trusted contact?” rather than,

“Would you like to name a trusted contact?” See 2026 FINRA Annual Regulatory Oversight Report, supra

note 5, at 37–40.

The proposed extension of the Rule 2165 maximum temporary hold period from 55 to

145 business days generated strong support by many commenters.67 For example, several

commenters stated that these amendments reflect the reality that fraud investigations frequently

take time and may involve coordination across institutions, jurisdictions, and law enforcement or

regulatory agencies.68

However, several commenters expressed opposition based on concerns regarding risks to

investors of prolonged asset freezes and investor autonomy.69 For example, Pittsburgh Law

Clinic stated that the proposed maximum 145-business-day hold period would impose severe and

disproportionate financial hardship on elderly investors living on fixed incomes. ASA stated that

it did not believe the maximum 145-business-day hold period was necessary in the vast majority

of situations and it would risk turning temporary holds into de facto long‑term freezes that could

impose substantial costs and hardship on seniors and other investors.

FINRA recognizes that many financial exploitation situations are resolved within the

existing time limits of Rule 2165, or within a longer time period, when extended by a relevant

authority.70 However, in other situations, the proposed additional extensions would provide

relevant government authorities with more time, where necessary, to assess referrals, determine

whether to investigate, and evaluate whether additional time will be needed to investigate or

resolve the matter. It would also provide additional time for a member to communicate with

CAI; Cardozo Law Clinic; CFP, FPA & NAPFA; Commonwealth; Fidelity; FSI; Hicks & Loeffel; Long &

Mierswa; LPL; SIFMA. Fidelity and SIFMA requested 45-business-day intervals in lieu of 30-businessday intervals.

Cardozo Law Clinic (citing research that APS investigation times vary dramatically by state: while the

national median stands at 36 days, Kentucky averages 72 days, Vermont 81 days, New Hampshire 90 days,

and Washington 113 days); Fidelity; Long & Mierswa; SIFMA.

ASA; PIABA; Pittsburgh Law Clinic.

FINRA notes that existing Rule 2165 permits holds beyond 55 business days at the relevant authority’s

request.

these authorities regarding whether to terminate or further extend the hold. Accordingly, FINRA

continues to believe that a maximum 145-business-day hold period is appropriate.

FINRA notes that the proposed rule change would impose measured conditions and other

safeguards designed to ensure that the extension framework is limited to appropriate

circumstances, and does not result in a default hold of 145 business days in all cases.

Specifically, the ability to extend for each 30-business-day period would be conditioned on the

member making reasonable follow-up efforts with the relevant authority regarding the status of

the reported matter, not having received a response, and continuing to have a reasonable belief of

financial exploitation. The extension framework would also require notification to relevant

parties and documentation associated with such extensions.

This balanced approach provides for longer holds in complex cases that have been

referred to government authorities while maintaining the integrity of a “temporary hold”

framework through a clearly defined process.

All commenters addressing the proposal to add “federal” agencies and authorities of

competent jurisdiction supported the change, with Hicks & Loeffel requesting guidance

concerning relevant federal entities.71 Several commenters supported the proposed expansion of

individuals authorized to place a hold,72 with CAI requesting further broadening and NASAA

urging caution. There was minimal feedback on FINRA’s proposed codification of existing

FAQ guidance,73 and no opposition.

Proposed New Rule 2166 “Speed Bump”

CAI; Fidelity; Hicks & Loeffel; NASAA; PIABA; SIFMA.

ASA; CAI; Fidelity; Long & Mierswa; SIFMA.

See supra Item II.A.1.III.D.

The Notice Proposal would permit a member firm to place a temporary delay of up to

five business days on a transaction or disbursement in the account of a customer if there is a

reasonable belief of fraud targeting the customer, with associated safeguards. There was broad

support for this proposed new rule; however, there were varying perspectives on duration.74 Six

commenters explicitly supported the initially proposed five-business-day period as appropriate,

with some advocating for limited permitted extensions.75 However, multiple commenters raised

concerns that a five-business-day period would be insufficient for investigation and customer

outreach, and advocated for a longer period, with specific suggestions ranging from seven to 20

business days.76

For example, CFP, FPA & NAPFA stated that a longer “speed bump” would allow firms

to better evaluate the situation and align with law enforcement and may also help customers

recognize what may actually be a high-pressure scam, which could cloud a victim’s judgment,

especially “in the moment.”77 Fidelity suggested that a short timeframe could expose clients to

greater risk by unnecessarily expediting investigations and removing transaction holds. Fidelity

opined that increasing the holding period of the “speed bump” would better reflect the

operational realities of fraud protection. Commonwealth disagreed with the five-business-day

period, noting the “stark” difference in length between the Rule 2165 and Rule 2166 holds.78

Based on feedback that the initially proposed five-business-day temporary delay period is

inadequate, FINRA is proposing a temporary delay of 10 business days. FINRA believes 10

ASA; Apex; CAI; Cambridge; Cardozo Law Clinic; Commonwealth; Fidelity; FSI; Hicks & Loeffel; Long

& Mierswa; LPL; PIABA; Pittsburgh Law Clinic; SIFMA.

Apex; ASA; Cardozo Law Clinic; PIABA; Pittsburgh Law Clinic; St. John’s.

CAI; CFP, FPA & NAPFA; Fidelity; FSI; Long & Mierswa; LPL; Mustico; SIFMA.

CFP, FPA & NAPFA.

Commonwealth.

business days would provide members more time to facilitate outreach to the customer (away

from perpetrator influence), and, if the firm chooses, authorized parties or trusted contact

persons, in order to persuade the customer to recognize the attempted fraud and not to proceed

with the transaction or disbursement, thereby preventing customer losses. The additional time

would also provide member firms flexibility to engage in the types of fraud prevention activities

that commenters described, such as coordination across firm departments, account review and

verification processes, trusted contact person engagement and consultation with regulatory

agencies or law enforcement.

FINRA does not believe permitting a delay of longer than 10 business days under new

Rule 2166 would be appropriate at this time, as it would risk turning what is intended to function

as a temporary “speed bump” that helps firms disrupt fraud before disbursements or transactions

occur into a longer hold process. A substantially longer delay for all adult customers could

increase the risk of interfering with customer autonomy. FINRA believes a 10-business-day

temporary delay approach balances investor protection with respect for customer autonomy.

Apex sought confirmation that firms would have flexibility to release a Rule 2166 hold

early if the fraud concern is cleared before the hold period expires. FINRA confirms that early

termination of a hold is permitted and notes that the safe harbor protection of proposed Rule

2166 is conditioned on the member having a reasonable belief that fraud has occurred, is

occurring, has been attempted, or will be attempted. Accordingly, FINRA would expect a

member to lift a temporary delay when it no longer has a reasonable belief of fraud.79

This is consistent with the approach in Rule 2165. See Securities Exchange Act Release No. 79964

(February 3, 2017), 82 FR 10059, 10067 (February 9, 2017) (Order Granting Accelerated Approval of File

No. SR-FINRA-2016-039).

The Notice Proposal would require the member firm to provide notification to authorized

parties on the account and a trusted contact person of the temporary delay, the reason for the

delay, and how the member can be contacted for questions or concerns. Several commenters

raised concerns that this mandatory notification to parties other than the customer may be

unnecessary to address suspected fraud, could be viewed as overreaching by customers, could

create confusion and unnecessary customer friction (especially in the absence of customer

vulnerability), and could discourage trusted contact adoption or even chill member firms’

willingness to rely on the safe harbor.80 These commenters advocated for making notification to

trusted contact persons and other authorized parties discretionary rather than mandatory under

Rule 2166 (unlike Rule 2165, which applies to vulnerable adults and seniors).

Based on these comments, FINRA is proposing to require notification only to the

customer, as discussed above. FINRA believes it is appropriate and consistent with the purposes

of proposed Rule 2166 to provide member firms flexibility in this regard to address suspected

fraud on a case-by-case basis. Notification to authorized parties and trusted contact persons

would be permitted at the member’s discretion.

Permissive vs. Mandatory Hold under Rule 2165 and Proposed New Rule 2166

Current Rule 2165 and proposed Rule 2166 are structured as safe harbors, permitting

members to place a temporary hold on a transaction or disbursement in a customer’s account if

there is a reasonable belief of financial exploitation/fraud targeting the customer, with associated

safeguards. Two commenters objected to the permissive nature of these rules, instead

advocating for a mandatory hold if a member firm observes red flags of exploitation or fraud.81

ASA; Fidelity; LPL; SIFMA.

Fitapelli; PIABA.

For example, Fitapelli stated that, “By allowing firms to decline intervention even when

credible red flags of exploitation are present, the rule shields members from liability while

leaving elderly customers exposed. The permissive nature of the rule undermines its stated

purpose of protecting senior investors.”82 Fitapelli urged FINRA to amend Rule 2165 to “require

mandatory transaction holds and reporting when objective indicators of elder financial

exploitation are present, supported by clear standards and regulatory oversight.”83 PIABA

echoed similar sentiments, stating that a firm’s affirmative duty to delay a disbursement or take

other protective actions for its customers when it suspects fraud or abuse must be more explicit.

PIABA pointed to the “growing body of state law that already imposes mandatory reporting

obligations on broker-dealers and investment advisers.”84

Tobin recommended FINRA adopt a mandatory escalation framework “when a licensed

industry professional raises a senior-exploitation concern.”85 Tobin also recommended FINRA

require “documentation when a broker declines to act under Rule 2165.”86

FINRA continues to believe that a permissive hold framework would better serve both

investor protection and operational realities than a mandatory hold framework. The existence of

trusted contact persons, internal escalation procedures, and other protective measures (including,

as applicable, relevant state laws) under the current framework provides multiple pathways for

intervention without requiring holds in every case. Members may determine that customer

education, trusted contact person notification, or enhanced monitoring represents a more

Fitapelli.

See supra note 82.

PIABA, at 3.

Tobin, at 2.

See supra note 85.

appropriate response than temporary holds in some instances, and mandatory holds would

eliminate this graduated approach.

“Reasonable Belief” Standard

To rely on Rule 2165 or proposed Rule 2166, a member must have a reasonable belief of

financial exploitation targeting the customer under Rule 2165 or a reasonable belief of fraud

targeting the customer under proposed Rule 2166.87 Several commenters requested guidance on

the “reasonable belief” standard.88 The “reasonable belief” standard is intentionally designed to

accommodate a wide variety of facts and circumstances to which these rules apply.89 FINRA

also notes that members have experience with applying this standard under Rule 2165.

However, FINRA remains committed to assisting member firms in protecting investors, and will

consider providing additional interpretive guidance if implementation experience reveals areas

where members would benefit from further clarification.

ACATS-Related Fraud

Apex focused on the interaction between proposed Rule 2166, FINRA Rule 11870

(Customer Account Transfer Contracts), and National Securities Clearing Corporation (“NSCC”)

Rule 50 (Automated Customer Account Transfer Service) in the ACATS context. Apex

Separately, under Rule 2165, the definition of Specified Adult incorporates a “reasonable belief standard”

with respect to impairments (“a natural person age 18 and older who the member reasonably believes has a

mental or physical impairment that renders the individual unable to protect his or her own interests”).

FINRA notes that a customer’s suspected diminished capacity alone is not sufficient to place a temporary

hold or delay under Rules 2165 or proposed Rule 2166, but rather the member firm must have a

“reasonable belief” of fraud or financial exploitation. See also supra note 34.

Cardozo Law Clinic; Mustico; NASAA; Sigma/Parkland; Singer.

FINRA has developed several programs to provide member firms with intelligence, resources and practical

guidance that are useful in identifying red flags of fraud and protecting customers from increasingly

sophisticated fraud schemes. For example, FINRA launched its Financial Intelligence Fusion Center

(“FIFC”) in 2026 to collect, analyze, and disseminate cyber and fraud threat intelligence to member firms

in real time through a secure portal. Moreover, FINRA provides member education in various forms

including conferences, workshops, the FINRA Annual Regulatory Oversight Report, and continuing

education courses. As discussed above, FINRA also publishes investor education materials that member

firms can share with customers.

supported proposed Rule 2166 but raised concerns that its effectiveness would be constrained

unless the account transfer framework and indemnification rules are modernized. Apex

recommended that FINRA amend Rule 11870 to add suspected fraud as a permissible basis to

take exception to a transfer instruction and coordinate with NSCC/DTCC and the Commission

regarding indemnification reform.

FINRA appreciates Apex’s concerns regarding ACATS-related fraud and the interaction

between proposed Rule 2166 and existing account transfer processes. Proposed Rule 2166

would provide member firms with a safe harbor from Rule 11870 when a firm acts in accordance

with the requirements of the proposed rule.

Amendments to Rule 11870 are outside the scope of this proposal, but FINRA is

separately considering whether additional steps may be appropriate to deter fraud in the new

account opening and account transfer processes.90

Litigation/Complaint Risk

Several commenters raised concerns that expanded authority to place temporary holds or

delays could increase litigation risk, customer complaints or adverse consequences for associated

persons.91

FINRA recognizes that firms may face competing risks when they act to protect

customers from suspected fraud or financial exploitation and when they decline to do so. FINRA

emphasizes that Rule 2165 and proposed new Rule 2166 are permissive safe harbors that do not

require member firms to place temporary holds or delays, nor do they create private rights of

See, e.g., FINRA Quarterly Regulatory Policy Agenda (June 2026), https://www.finra.org/rulesguidance/rulemaking-process/regulatory-policy-agenda.

See ASA; Cambridge; Sigma/Parkland.

action. Whether a customer complaint is reportable depends on the applicable reporting

requirements and the facts and circumstances of the complaint.92

III.

Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Within 45 days of the date of publication of this notice in the Federal Register or within

such longer period (i) as the Commission may designate up to 90 days of such date if it finds

such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which

the self-regulatory organization consents, the Commission will:

(A) by order approve or disapprove such proposed rule change, or

(B) institute proceedings to determine whether the proposed rule change should be

disapproved.

IV.

Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the

foregoing, including whether the proposed rule change is consistent with the Act. Comments

may be submitted by any of the following methods:

Electronic Comments:

•

Use the Commission’s Internet comment form (https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number SR-FINRA-2026018 on the subject line.

FINRA has indicated that it will consider issuing guidance regarding aspects of customer complaint

reporting under FINRA Rule 4530 (Reporting Requirements). See Rule 4530; FINRA Quarterly

Regulatory Policy Agenda, supra note 90; see also Form U4 (Uniform Application for Securities Industry

Registration or Transfer) at Item 14I(3)(b) and Form U5 (Uniform Termination Notice for Securities

Industry Registration) (which, in general, require disclosure if an individual is the subject of a written

customer complaint that alleges that a registered or formerly registered individual was involved in forgery,

theft, misappropriation or conversion of funds or securities).

Paper Comments:

•

Send paper comments in triplicate to Secretary, Securities and Exchange Commission,

100 F Street, NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-FINRA-2026-018. This file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method. The Commission will post all

comments on the Commission’s Internet website (https://www.sec.gov/rules/sro.shtml). Copies

of the filing will be available for inspection and copying at the principal office of FINRA. Do

not include personal identifiable information in submissions; you should submit only information

that you wish to make available publicly. We may redact in part or withhold entirely from

publication submitted material that is obscene or subject to copyright protection. All

submissions should refer to file number SR-FINRA-2026-018 and should be submitted on or

before [INSERT DATE 21 DAYS FROM PUBLICATION IN THE FEDERAL REGISTER].

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority.93

Sherry R. Haywood,

Assistant Secretary.

17 CFR 200.30-3(a)(12).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.