Nearly 700 Reports Financial Abuse of Elders/Dependent Adults Received By DFPI

In 2019, I wrote about a then pending proposal, SB 496 (Moorlach), to add broker-dealers and investment advisers to the category of mandated reporters of known or suspected financial abuse of elders or dependent adults.   This legislation was later enacted, 2019 Cal. Stats. ch. 272, and took effect on January 1, 2020.   As a result, the broker-dealers and investment advisers became subject to reporting requirements similar to those already imposed on banks and credit unions (the requirements differ in respect to which agency or agencies a report must be submitted.  The Department of Financial Protection & Innovation reports that in the first 18 months since the law took effect, it has received and reviewed 699 reports pursuant to this legislation.

At the time, I questioned whether imposing this reporting requirement might run afoul of Section 15(i)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) which states:

No law, rule, regulation, or order, or other administrative action of any State or political subdivision thereof shall establish capital, custody, margin, financial responsibility, making and keeping records, bonding, or financial or operational reporting requirements for brokers, dealers, municipal securities dealers, government securities brokers, or government securities dealers that differ from, or are in addition to, the requirements in those areas established under this title [the Exchange Act].

To date, there are no reported decisions answering that question.