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Missouri’s new Senior Savings Protection Act

August 25, 2015

Client update: Missouri’s new Senior Savings Protection Act goes into effect on Aug. 28, 2015

The Missouri Senior Savings Protection Act (SSPA) goes into effect Aug. 28. It provides broker-dealers the option to refuse certain customer instructions to disburse account assets if the firm has a reasonable belief that the customer is the victim of financial abuse or fraud and they notify certain government agencies. Below are answers to some anticipated questions on the scope and important points of the SSPA.

What does the SSPA change?
Currently, broker-dealers who suspect a customer has or will be the victim of financial fraud or abuse cannot generally communicate any information to noncustomers. As explained below, that changes with the SSPA.

Which customers does the SSPA apply to?
The SSPA applies to qualified adults who hold accounts at brokerage firms. “Qualified adults” include either (1) adults 60 years of age or older; or (2) adults between the ages of 18 and 59 that have a mental or physical impairment that is verified by medical findings and substantially limits one or more major life activities, whether it is congenital or acquired by accident, injury or disease.

Who may notify third parties?
The SSPA allows a broker-dealer’s qualified individuals to notify third parties that they have a reasonable belief that financial exploitation has occurred, has been attempted or is being attempted. “Qualified Individuals” include individuals who are associated with a broker-dealer such as supervisory or compliance personnel, registered representatives or any other such individuals who serve in a “legal capacity as part of his or her job.

Which third parties may be contacted?
A brokerage firm’s qualified individuals may first notify the Missouri Department of Health and Senior Services or the Missouri Commissioner of Securities. After notifying these agencies, the qualified individuals may also notify the customer’s spouse, children, parent, sibling, legal guardian, conservator, co-trustee, successor trustee or agent under a power of attorney.

When may requests for disbursements be refused?
A brokerage firm’s qualified individuals may refuse disbursement instructions if (1) there is a reasonable belief that the requested disbursement will result in financial exploitation of the qualified adult; (2) within two business days, the broker-dealer or the qualified individual makes a reasonable effort to notify everyone authorized on the account that the disbursement request will not be followed; and (3) within three business days, the firm or the qualified individual notifies the Missouri Department of Health and Senior Services and the Missouri Commissioner of Securities. The ability to refuse disbursements extends to accounts owned by the qualified adult or in which they have a beneficial interest.

How long may a request to disburse be refused?
A brokerage firm’s authorization to refuse disbursement requests expires upon the earlier of (1) the time when the broker-dealer or its qualified individuals reasonably believes that the disbursement will not result in financial exploitation of the account holder; or (2) 10 business days after the firm’s initial refusal to follow the request. The SSPA allows a court to extend the time period for refusing the request for disbursement.

Does the SSPA provide a legal defense for acting within its provisions?
Yes. The SSPA provides immunity from civil liability to broker-dealers and their qualified individuals who comply with all provisions of the SSPA and act “in good faith” while “exercising reasonable care.” However, note that “good faith” is not defined by the SSPA. Reasonable care is a standard generally used to determine whether conduct was or was not negligent.

May account records be shared with law enforcement?
Yes, but only to the Missouri Department of Health and Senior Services, the Missouri Commissioner of Securities or other law enforcement agencies. Only records relevant to the suspected financial exploitation may be provided, and the SSPA provides that such records will not be considered governmental public records as defined in Mo. Rev. Stat. § 610.010(6).

Will the Missouri Securities Commission supply any additional resources under the SSPA?
They have not yet. But the SSPA requires the Securities Commissioner to design and develop a website that will provide training resources to assist broker-dealers and their qualified individuals in preventing and detecting financial exploitation of qualified adults. The initial deadline for this website is Sept. 1, 2016.

The full text of the Missouri Senior Savings Protection Act may be found here: http://www.senate.mo.gov/15info/pdf-bill/tat/SB244.pdf

Navigating the contours of the SSPA can be complex, especially as firms determine what rises to the level of “reasonable belief,” what information should/can be disclosed to law enforcement, and when restrictions must be removed.

If you have any questions about the topics covered in this client update or the nuances of the SSPA, contact Don McBride, any member of Greensfelder's Securities & Financial Services Group, or your regular Greensfelder contact.