The House of Representatives has passed, by a vote of 414-2, H.R.2478, the bipartisan Financial Exploitation Prevention Act. The bill would strengthen protections preventing the financial exploitation of seniors and other vulnerable adults by granting investment firms and financial institutions the legal authority to temporarily pause suspicious transactions.
Reps. Ann Wagner (R-MO) and Josh Gottheimer (D-NJ) sponsored the bill, which now goes to the Senate. There is a bipartisan companion bill in the Senate, S.2840. Its sponsors are Sens. Bill Hagerty (R-TN) and Ruben Gallego (D-AZ).
The bill allows open-end investment companies (such as mutual funds and ETFs) and their transfer agents to delay the redemption of securities for an initial fifteen business days if there is a reasonable belief of financial exploitation. The redemption pause can be extended for an additional 10 business days or longer if mandated by state regulators or a court.
The protections in the legislation target "specified adults," defined as individuals age 65 or older and vulnerable adults with mental or physical impairments. The bill requires the Securities and Exchange Commission (SEC), in consultation with other federal regulators, to report to Congress on policy recommendations to better mitigate senior financial abuse.
"Every American deserves the confidence that the savings they've worked a lifetime to build will be protected from financial exploitation,” said NAIFA President Christopher L. Gandy, LACP. “H.R. 2478 provides financial professionals and institutions with an important tool to help identify and stop suspected fraud before irreversible harm occurs. NAIFA applauds the House for its bipartisan support of this commonsense legislation and urges the Senate to act so seniors and other vulnerable adults can benefit from these critical protections."
Prospects: This legislation’s prospects are good if the bill can overcome the jammed pipeline for legislation in the Senate.
NAIFA Staff Contact: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.