On April 21, 2017, FINRA issued a press release marking the second anniversary of its Securities Helpline for Seniors. The press release may be found here.
As most of our readers know, the Helpline provides a toll-free number that senior individuals and their caretakers can call to voice concerns about the handling of their brokerage and investment accounts. The Helpline has not only been a useful resource for these individuals, but it has also helped FINRA understand the types of issues that these investors face.
The release notes a number of interesting statistics relating to the use of the Helpline in its two-year history:
FINRA notes that the calls raised concerns about, among other issues, potential unsuitable recommendations, account churning, fraud and illegal activity involving brokerage accounts and investments.
FINRA also notes, approvingly, that many FINRA member firms have established designated points of contact to work with Helpline staff to streamline the resolution of investor issues.
In the release, FINRA also reported that in one case a senior investor called regarding an investment in a structured CD. The investor stated that the terms of the CD were not consistent with what he understood at the time of the purchase, and he indicated that, prior to the investment, he received 1% per year on a (conventional) savings account. At the time of purchase, and his move away from the conventional account, he was told the CD would pay 2.5 to 3.5% per year; however, when he received the confirmation of his purchase, he noticed that the return would be spread over the six-year term of the product. After speaking to FINRA's Helpline staff, the relevant broker-dealer agreed to sell the CD for the investor and to reimburse the customer for any loss incurred on the sale. This fact pattern reminds us that even relatively simple structured products, such as "lightly structured" CDs, have the potential to be mis-sold, and the sales of such products often require substantial supervision and training.