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.
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