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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
vulnerable adults; financial exploitation
Purpose
Outlines a process for an individual working with an investment adviser or dealer-broker to report suspected or attempted financial exploitation of a vulnerable adult. Outlines requirements for delayed disbursement of monies from the vulnerable adult's account by a broker-dealer or investment adviser.
Background
Adult Protective Services (APS) is a program under the Department of Economic Security responsible for investigating allegations of abuse, exploitation and neglect of vulnerable adults. Exploitation is the illegal or improper use of a vulnerable adult or their resources for another person's profit or advantage. The transfer of assets from a person to that person's spouse, child with a disability, or to a trust for the benefit of that person's spouse or child with disability is excluded from the definition of exploitation. APS seeks to maintain an adult in a familiar environment by strengthening their capacity for self-maintenance or by providing supportive services. Upon receiving a report of an adult who may need protective services, an APS worker makes an evaluation to determine if the adult is in need of APS and what services, if any, are necessary. An APS worker may offer any services deemed appropriate following evaluation and file petitions as necessary for the appointment of a guardian or conservator or for a special visitation warrant (A.R.S. §§ 46-451 and 46-452).
A broker-dealer is an individual involved in trading and selling securities, particularly on the behalf of others (A.R.S. § 44-1801). An investment adviser is a person who, for compensation, provides advice regarding investing in or selling securities or provides analyses or reports concerning securities. An investment adviser representative is any partner, officer or director of an investment adviser, or individual who performs functions associated with such a position (A.R.S. § 44-3101).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows an agent, investment adviser representative or person who serves in a supervisory, compliance or legal capacity for a broker-dealer or investment adviser (qualified individual) to notify APS, the Arizona Corporation Commission (ACC) or a third party designated by an eligible adult if the qualified individual reasonably believes that financial exploitation of an eligible adult has been or is being attempted.
2. Grants immunity from any administrative or civil liability to a qualified individual who:
a) notifies APS and the ACC of suspected or attempted financial exploitation of an eligible adult in good faith and with reasonable care; and
b) makes a disclosure to a designated third party in good faith and with reasonable care.
3. Prohibits a qualified individual from making a disclosure to any designated third party suspected of financial exploitation or other abuse of an eligible adult.
4. Allows a broker-dealer or investment adviser to delay disbursement from an account of an eligible adult if:
a) the broker-dealer, investment adviser or qualified individual believes after an internal review that the disbursement may result in the financial exploitation of the eligible adult; or
b) the broker-dealer or investment adviser:
i. provides written notification of the delay within two business days to all parties authorized to use the account, except any party reasonably believed to have engaged in suspected or attempted financial exploitation;
ii. notifies APS and the ACC within two business days of the requested disbursement; and
iii. continues the internal review of the suspected or attempted financial exploitation and reports the results of the investigation to APS and the ACC within seven business days after the requested disbursement.
5. Requires a delayed disbursement to expire on the earlier of:
a) a determination by the broker-dealer or investment adviser that the disbursement will not result in the financial exploitation of an eligible adult; or
b) 15 business days after the date the broker-dealer or investment adviser delayed the disbursement, unless APS or the ACC requests an extension of up to ten additional days.
6. Allows a court to extend the delay of disbursement and order other protective relief based on the petition of the ACC, APS, the broker-dealer or the investment adviser that initiated the delay.
7. Grants immunity from any administrative or civil liability to a broker-dealer or investment adviser who delays a disbursement in good faith and with reasonable care.
8. Requires a broker-dealer or investment adviser to provide records relevant to the suspected or attempted financial exploitation of an eligible adult to APS and law enforcement as part of a referral or pursuant to an investigation.
9. Allows records provided by a broker-dealer or investment adviser to APS or law enforcement to include historical records and records relating to the most recent transaction or transactions that may comprise financial exploitation of an eligible adult.
10. Specifies that any records provided by a broker-dealer or investment adviser to APS or law enforcement are not public records.
11. Allows the ACC to access and examine the books and records of broker-dealers and investment advisers.
12. Defines broker-dealer, eligible adult, financial exploitation, investment adviser, investment adviser representative and qualified individual.
13. Becomes effective on the general effective date.
Prepared by Senate Research
February 18, 2019
MH/FLF/kja