FINRA 'speed bump' proposal promoted as way to stop rapid fraud transfers

Rep. French Hill and several committee members urged adoption of a temporary-hold mechanism to give victims and institutions time to verify high-risk transfers and to disrupt fast-moving frauds.

FINRA witness Mr. Smith described the proposed Rule 2166 "speed bump," a five-business-day hold on suspicious transactions, as a simple but powerful tool. He said many frauds fail if victims are given time to ask questions: "If the victim had asked one more question ... those Ponzi schemes ... would have fallen apart," he said, adding that the pause also allows firms to consult trusted contacts and coordinate investigations with law enforcement.

AARP's Ms. Gunther and other witnesses supported the approach as part of a layered defense. Ms. Gunther said the hold gives institutions time to conduct investigations and gives older consumers breathing room during 'fight-or-flight' pressure that scammers create. She noted that trusted-contact designations complement holds by enabling family members or designated third parties to assist at moments of crisis.

Witnesses also stressed the practical limits and legal nuances. FINRA representatives noted their limited jurisdiction over broker‑dealers and emphasized ongoing coordination with the SEC, state securities regulators and law enforcement. Members repeatedly linked the proposal to state "report-and-hold" laws and urged broader information-sharing so that a threat seen in one state can quickly inform other jurisdictions.

The hearing did not produce a vote or formal committee action on the rule. Members from both parties asked staff and witnesses to provide follow-up data; the record remains open for written questions and additional submissions.