FINRA has proposed an optional fraud-delay framework that would reach beyond the current rule for older or otherwise vulnerable investors. New Rule 2166 would give a member firm a regulatory safe harbour to delay a transaction or disbursement for up to 10 business days when it reasonably believes fraud may be occurring.[1]
The SEC filing remains a proposal following the 30 September comment deadline. Its two mechanisms address different situations: a short fraud pause for adult customers generally, and a longer, conditional exploitation process for specified adults. Neither proposed change is yet available as an adopted FINRA rule.[1][2]
Two delay mechanisms would serve different customer groups
Proposed fraud and exploitation holds
| Feature | Proposed Rule 2166 | Amended Rule 2165 |
|---|---|---|
| Customer scope | Any adult customer | Specified adults, including older customers and adults with relevant impairmentsSource 1Source 3 |
| Trigger | Reasonable belief of fraud | Reasonable belief of financial exploitationSource 1 |
| Initial maximum | Up to 10 business days | Existing hold framework; proposed conditional extensions from 55 to 145 business daysSource 1 |
| Purpose | Create time to investigate a suspicious transaction or disbursement | Protect a customer who may be unable to protect their own interestsSource 1Source 3 |
Key proposed safeguards and timing
| Measure | Value | Context |
|---|---|---|
| Customer notice | Within two business days | Under proposed Rule 2166, notice would explain the delay, its reason and how to contact the firm; notification may be oral.Source 1 |
| Rule 2166 maximum | 10 business days | The firm’s proposed safe-harbour period; a competent regulator, agency or court could terminate or extend it.Source 1 |
| Rule 2165 potential maximum | Up to 145 business days | The existing 55-day maximum plus three conditional 30-business-day extensions, subject to authority-directed changes.Source 1 |
| Comment deadline | 30 September 2026 | The comment period has closed; approval, amendment or rejection remains possible.Source 1Source 2 |
How the 145-day extension framework would work
The proposed total is 55 existing business days plus three further periods of 30 business days. Each additional period requires reasonable follow-up with the relevant authority, no response and a continuing reasonable belief of exploitation. The first extension beyond 55 days also requires notification under the proposal. The authority can separately terminate or extend the hold.[1]
A shorter pause gives the firm time to investigate suspected fraud
For Rule 2166, the trigger is a reasonable belief that fraud has occurred, is occurring, has been attempted or will be attempted. The firm would notify the customer within two business days, investigate the instruction and relevant account evidence, and use the limited window for customer contact and appropriate escalation. Contact with another authorised person or trusted contact would be optional under this proposed route.[1]
An unusual instruction requires an evidence-based assessment, and the continuing review should determine when the transaction can proceed. A competent federal or state regulator or agency, or a court, could change the ten-business-day endpoint. The broker’s safe harbour itself is a limited regulatory protection for a qualifying delay, rather than a finding that fraud or customer wrongdoing has occurred.[1]
Trusted-contact information is part of the same prevention architecture
The filing would let firms use “emergency contact” as an alternative term for a trusted contact and seek permission to apply that contact across existing and future accounts, while offering an account-by-account choice. The contact helps verify circumstances but receives no automatic authority to trade, withdraw or override the account holder.[1][3]
The proposal’s policy trade-off is direct: acting too slowly can make fraud losses irreversible, while acting too broadly can prevent a customer from accessing lawful funds or executing a legitimate trade. The value of the safe harbour therefore depends on precise triggers, documentation, notice, continuing review and escalation.[1]
Sources & further reading
- FINRA proposed Rules 2166, 2165 and 4512 amendments US Securities and Exchange Commission · 3 Sep 2026 · Accessed 16 Oct 2026
- Public-comment page for SR-FINRA-2026-018 US Securities and Exchange Commission · 9 Sep 2026 · Accessed 16 Oct 2026
- Protecting seniors from financial exploitation FINRA · 16 Oct 2026 · Accessed 16 Oct 2026