Bill Text: MI SB0315 | 2021-2022 | 101st Legislature | Introduced
Bill Title: Occupations: securities; notification and temporary hold on certain account disbursements for the protection of certain adults by broker-dealers and investment advisors; allow. Amends title of 2008 PA 551 (MCL 451.2101 - 451.2703) & adds art. 5A.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2022-06-08 - Referred To Second Reading [SB0315 Detail]
Download: Michigan-2021-SB0315-Introduced.html
SENATE BILL NO. 315
A bill to amend 2008 PA 551, entitled
"Uniform securities act (2002),"
(MCL 451.2101 to 451.2703) by amending the title, as amended by 2014 PA 355, and by adding article 5A.
the people of the state of michigan enact:
An act to enact the uniform securities act (2002) relating to the issuance, offer, sale, or purchase of securities; to prohibit fraudulent practices in relation to securities; to establish civil and criminal sanctions for violations of the act and civil sanctions for violation of the rules promulgated pursuant to under the act; to require the registration of broker-dealers, agents, investment advisers, and securities; to regulate Michigan investment markets; to make uniform the law with reference to securities; to authorize certain actions to protect certain specified adults from financial exploitation; to prescribe the powers and duties of certain state governmental officers and agencies; and to repeal acts and parts of acts.
ARTICLE 5A
FINANCIAL EXPLOITATION OF SPECIFIED ADULTS
Sec. 531. As used in this article:
(a) "Account" means any account with a broker-dealer or investment advisor for which a specified adult has the authority to transact business.
(b) "Financial exploitation" means any of the following:
(i) The wrongful or unauthorized taking, withholding, appropriation, or use of a specified adult's funds or securities.
(ii) Any act or omission by a person, including through the use of a power of attorney, guardianship, or any other authority regarding a specified adult, to do either of the following:
(A) Obtain control, through deception, intimidation, or undue influence, over the specified adult's money, assets, or property.
(B) Convert the specified adult's money, assets, or property.
(c) "Specified adult" means either of the following:
(i) An individual who is 65 years of age or older.
(ii) An individual who is 18 years of age or older and who the broker-dealer or investment advisor reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.
Sec. 533. (1) A broker-dealer or investment advisor may place a temporary hold on a disbursement of funds or securities from an account of a specified adult, or any other transaction concerning that account, if all of the following are met:
(a) The broker-dealer or investment advisor reasonably believes that financial exploitation of the specified adult has occurred, is occurring, has been attempted, or will be attempted.
(b) Within 2 business days after the date that the broker-dealer or investment advisor first placed the temporary hold on the disbursement of funds or securities, or other transaction, the broker-dealer or investment advisor provides notification, electronically or in writing, that is maintained as correspondence under section 411(3), of the reason for the temporary hold to all of the following:
(i) All parties who are authorized to transact business on the account, unless a party is unavailable or the broker-dealer or investment advisor reasonably believes that the party has engaged, is engaged, or will engage in the financial exploitation of the specified adult.
(ii) To any individual who the specified adult has previously designated as authorized to receive information about the account, unless that individual is unavailable or the broker-dealer or investment advisor reasonably believes that the individual has engaged, is engaged, or will engage in the financial exploitation of the specified adult.
(c) The broker-dealer or investment advisor immediately initiates an internal review of the facts and circumstances that caused the broker-dealer or investment advisor to reasonably believe that the financial exploitation of the specified adult has occurred, is occurring, has been attempted, or will be attempted.
(2) A temporary hold authorized under this section expires not later than 15 business days after the date that the broker-dealer or investment advisor first placed the temporary hold on the disbursement of funds or securities, or other transaction, unless otherwise terminated or extended by the administrator, another agency of competent jurisdiction, or a court of competent jurisdiction, or unless extended under subsection (3).
(3) If the broker-dealer's or investment advisor's internal review of the facts and circumstances under subsection (1)(c) supports the broker-dealer's or investment advisor's reasonable belief that the financial exploitation of the specified adult has occurred, is occurring, has been attempted, or will be attempted, a broker-dealer or investment advisor may extend a temporary hold authorized under this section for not longer than 10 business days following the date authorized under subsection (2), unless otherwise terminated or extended by the administrator, another agency of competent jurisdiction, or a court of competent jurisdiction.
(4) Subsections (2) and (3) do not require the administrator to extend or terminate a temporary hold authorized under this section.
Sec. 535. (1) A broker-dealer or investment advisor that takes action under this article shall establish and maintain written procedures reasonably designed to achieve compliance with this article, including, but not limited to, procedures related to the identification, escalation, and reporting of matters related to the financial exploitation of specified adults.
(2) The procedures required under subsection (1) must identify the title of each individual who is authorized to place, terminate, or extend a temporary hold on behalf of the broker-dealer or investment advisor under this article. Only an individual who serves in a supervisory, compliance, or legal capacity for the broker-dealer or investment advisor is eligible for identification as an authorized individual under this subsection.
Sec. 537. (1) Subject to 15 USC 78o(i)(1) and 15 USC 80b-18a, and subject to the record-keeping requirements provided in section 411, a broker-dealer or investment advisor shall retain records related to compliance with this article and ensure that those records are readily available to the department on request. The retained records must include records of all of the following:
(a) Any requests for a disbursement or other transaction that a broker-dealer or investment advisor reasonably believed to constitute financial exploitation of a specified adult and the resulting temporary hold.
(b) Any finding of a reasonable belief that financial exploitation has occurred, is occurring, has been attempted, or will be attempted underlying a decision to place a temporary hold on a disbursement or other transaction.
(c) The name and title of any broker-dealer or investment advisor that authorized a temporary hold on a disbursement or other transaction.
(d) Any notifications to relevant parties under section 533(1)(b).
(e) Any internal review of the facts and circumstances conducted under section 533(1)(c).
(2) A broker-dealer or investment adviser shall provide access to or copies of the records retained under subsection (1) to agencies of this state charged with administering state adult protective services laws and to law enforcement, either as part of a referral to the agency or to law enforcement, or upon request of the agency or law enforcement pursuant to an investigation. The records may include historical records as well as records relating to the most recent transaction or transactions that may comprise financial exploitation or suspected financial exploitation of a specified adult. All records made available to agencies or law enforcement under this subsection are not subject to the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. This subsection does not limit or otherwise impede the authority of the administrator to access or examine the books and records of broker-dealers and investment advisers as otherwise provided by law.
Sec. 539. (1) This article does not require a broker-dealer or investment advisor to place temporary holds on disbursements of funds or securities from the accounts of specified adults or other transactions concerning those accounts.
(2) A broker-dealer or investment advisor that relies on this article shall develop and document training policies or programs reasonably designed to ensure that the broker-dealer or investment advisor complies with the requirements of this article.
(3) A broker-dealer's or investment advisor's reasonable belief that an individual who is 18 years of age or older has a mental or physical impairment that renders the individual unable to protect his or her own interests may be based on the facts and circumstances observed in the broker-dealer's or investment advisor's business relationship with that individual.
Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law.
