Securities Regulator:

Under MCL 451.2533, when a broker-dealer or investment adviser suspects or detects covered financial exploitation of a client or customer, the firm may temporarily delay a suspicious disbursement or transaction. When such a pause occurs, the firm must notify the Department of Licensing and Regulatory Affairs (“LARA”), Corporations, Securities & Commercial Licensing Bureau by submitting a Notification of Delay Form.

LARA:

• Serves as a required notified party pursuant to Michigan’s “Report and Hold” law, MCL 451.2533.
• May open an investigation against a bad actor when a security, registered or unregistered, is part of the instance of exploitation.

When making a report to LARA, you should:

• Submit the Notification Form within 2 business days of placing a hold.
• State why the firm placed the temporary hold.
• State what triggered the suspicion that led to the temporary hold.
• Describe the details of the transaction or disbursement.

Example Of “Description of Circumstances” that led to the temporary hold: John Doe, son of Jane Doe, was added to Jane’s investment account on Oct. 1 of this year. On October 3, three electronic transfers totaling $75,000 were made to John’s personal bank account. This activity was inconsistent with her long-standing history. Jane is 85 years old, had not had an online account, and – on follow-up – appears to be unaware that funds are being transferred out of her account. Jane’s daughter, Samantha Doe (phone number 220-1234) is the Trusted Contact on the Account. She has been called but has not responded.