FINRA Rule 2165

FINRA Rule 2165 is the industry's safe-harbor rule for protecting vulnerable investors. It permits — but does not require — a member firm to place a temporary hold on disbursements of funds or securities, or on securities transactions, when the firm reasonably suspects financial exploitation of a specified adult.

A specified adult is either a person age 65 or older, or a person 18 or older whom the firm reasonably believes has a mental or physical impairment that prevents them from protecting their own interests. Financial exploitation covers wrongful taking of the person's assets — whether through outright theft, undue influence, or misuse of authority such as a power of attorney.

When a firm places a hold, it must promptly notify all parties authorized on the account and the customer's trusted contact person (unless a notified party is the suspected exploiter), open an internal review of the facts, and document everything. The initial hold can last up to 15 business days, may be extended another 10 business days if the internal review supports it, and — if the firm has reported the matter to a state regulator, agency, or court of competent jurisdiction — may be extended a further 30 business days, for a maximum of 55 business days.

Because senior protection is a priority topic for regulators, Rule 2165 appears on the SIE, Series 7, and Series 6 exams. Know the definition of a specified adult, the hold timeframes, and that the rule provides a safe harbor for firms acting in good faith rather than an obligation to act.