The Financial Industry Regulatory Authority has submitted a rule filing to the Securities and Exchange Commission that would permit brokerages to pause suspicious disbursements or trades for up to 10 business days, double the five-day window outlined in a January proposal. The new Rule 2166 would provide a safe harbor for firms that act on a reasonable belief of fraud, extending protections beyond the senior-focused rules currently in place.
Unlike existing safeguards under Rule 2165, which apply to clients aged 65 and older or those with impairments, Rule 2166 would cover any customer aged 18 or above. FINRA's filing notes that fraud schemes increasingly target younger demographics, and the broader scope reflects a shift in regulatory thinking. The proposal follows Regulatory Notice 26-02, which drew comments from major broker-dealers, trade groups, and investor advocates before the March 9 deadline.
Industry feedback pushed for a longer intervention period. The American Securities Association, led by CEO Chris Iacovella, argued in a March letter that firms need the ability to "intervene when they see red flags" without imposing excessive freezes on innocent clients. FINRA's filing acknowledges that a 10-business-day hold allows firms to gather information, contact the customer, and potentially arrange in-person meetings, while accepting the trade-off of temporarily restricting access to funds.
The filing also proposes significant changes to Rule 2165, which governs holds on accounts of "Specified Adults"—those 65 or older, or 18 and older with a reasonable-belief impairment. Currently, firms can hold disbursements for an initial 15 to 25 business days, with a single 30-business-day extension after reporting to a regulator or court, capping the total at 55 business days. The new proposal would allow up to three additional 30-business-day extensions, raising the maximum to 145 business days, provided the firm continues to follow up with authorities and maintains a reasonable belief of ongoing exploitation.
FINRA cites feedback from the National Adult Protective Services Association, which noted that financial-exploitation investigations are often complex and "can take longer than a year," exceeding the current 55-day limit. The filing would also require firms to notify authorized parties and trusted contacts once a hold extends beyond 55 days, and would permit staff in dedicated senior-protection or fraud-prevention roles to authorize holds, not just supervisors.
The urgency stems from rising fraud losses. FINRA's filing references Federal Trade Commission data estimating that older Americans lost approximately $81.5 billion to fraud in 2024, accounting for underreporting. The FBI's Internet Crime Complaint Center reported over $7.7 billion in losses from Americans over 60 in 2025 alone. Criminals' use of artificial intelligence to impersonate family members or officials has made scams harder to detect, according to the filing.
FINRA also highlights a gap in trusted contact designations. Its Investor Education Foundation's 2024 National Financial Capability Study found that 42% of investors have named a trusted contact, up from 38% in 2021, but more than half have not. To address this, the proposal would allow firms to use the term "emergency contact" under Rule 4512 and apply a single designation across all of a client's accounts, rather than requiring separate forms.
For seniors on fixed incomes, fraud losses can be catastrophic, FINRA said, emphasizing that member firms serve as the "first line of defense." The filing is now under SEC review, with industry observers watching whether the extended holds will be approved. Related developments include a recent fraud sentencing and rising AI-related securities litigation, underscoring the regulatory focus on investor protection.
