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States Enact Good Samaritan Broker Laws

On January 22, 2016, the members of the North American Securities Administrators Association (NASAA) released the Senior Model Act.  It was developed and approved to serve as a model statute for states to adopt to target financial exploitation of seniors and to shield from liability brokers and brokerage firms who acted to assist those seniors. The Senior Model Act comports with a multitude of legislation and regulatory protection for seniors. Broadly stated, the Senior Model Act proposes language for legislation that would require “qualified individuals” such as broker-dealers and investment advisers, and those who work in a supervisory or legal capacity for them, to report any suspicions of financial elder abuse. The Senior Model Act proposes the protection of “eligible adults,” defined as those over the age of 65.

Key Provisions of the Senior Model Act:

  • Mandatory Reporting. Qualified individuals who reasonably believe a senior has been or is targeted to be financially exploited must report this promptly to their state’s security regulator and state’s adult protective services.

  • Notification to Third Parties. A qualified individual may only report this to a third party if the senior has designated one. A qualified individual cannot report it to a person who is suspected of committing the financial abuse.

  • Delayed Disbursements. Broker-dealers and investment advisers can delay disbursements from the senior’s account for up to 15 days. To do so, they must (a) notify people authorized to transact business on the senior’s account, (b) notify the state securities regulator and adult protective services, and (c) undertake an internal review of the suspected exploitation. The disbursements may be further delayed by the qualified individual for an additional 10 business days or by court order.

  • Immunity. Qualified individuals will have immunity from civil or administrative liability for actions taken pursuant to the Senior Model Act.

  • Providing Records. Broker-dealers and investment advisers would be required to comply with record requests from adult protective services or law enforcement when financial exploitation is suspected.

Twenty-eight states have passed laws that are substantially similar or identical to the Senior Model Act passed by the North American Securities Administrators Association. Click here for a state survey:

  • The effective date of the law in each state

  • Which key provisions the state has adopted

  • Any notable deviations or notes of interest.

© 2021 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 139



About this Author

Sandra Dawn Grannum, Finance, Securities Lawyer, Drinker Biddle Law Firm

Sandra Dawn Grannum concentrates her practice on securities, broker/dealer arbitration, litigation, mediation and regulatory defense.

Sandy has tried complex multimillion-dollar arbitrations before FINRA, AAA and JAMS across the country. She has tried more than 50 arbitrations before the NASD and FINRA through award represented brokerage firms, banks, clearing firms, and associated persons. In addition, she has successfully pursued cases in state and federal courts and in adversarial proceedings before bankruptcy courts.

Edward J. Scarillo Jr. Litigation Attorney Faegre Drinker Biddle & Reath Florham Park, NJ

Edward (EJ) Scarillo represents clients in a variety of commercial litigations, including in matters related to broker-dealers and financial industry clients before FINRA, as well as in business torts, contract disputes and consumer class actions in state and federal court.

EJ is a member of the firm’s Best Interest Compliance cross-disciplinary team, which advises Financial Services clients and prepares them for the changing regulatory landscape. He contributes to the firm's Broker-Dealer Law Blog, which provides...

Nicole Wixted, Drinker Biddle Law Firm, Philadelphia, Insurance and Litigation Law Attorney

Nicole C. Wixted represents clients in litigation matters in state and federal trial courts nationwide. Nicole advises and represents life insurers, property & casualty insurers, and brokerage general agencies on a broad range of issues including the secondary market for life insurance, stranger-originated life insurance (STOLI), premium financing, fraud, coverage, claims handling practices, market conduct and compliance, construction defects, product liability and premises liability. Nicole also evaluates issues relating to the issuance of insurance...