The SEC Office of Investor Education and Advocacy and FINRA urged investors to add a "trusted contact person" on brokerage accounts to protect against fraud.

In an Investor Alert, the SEC and FINRA defined a "trusted contact person" as a person that an investor authorizes their broker-dealer to contact if they believe the account has been exposed to potential fraud. However, the SEC and FINRA made clear, a trusted contact does not authorize the individual to act on the investor's behalf or execute transactions. The SEC and FINRA highlighted the benefits of designating a trusted contact, noting that while the designation is not mandatory, it could help broker-dealers by:

  • ensuring that investors' contact information is up to date;

  • responding to possible financial exploitation or fraud regarding investors' accounts;

  • confirming the health status of investors; and

  • verifying the identity of any legal guardian, executor, trustee or holder of a power of attorney on an account.