HR2478Passed House

Financial Exploitation Prevention Act of 2025

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Introduced
In Committee
Passed One Chamber
4
Passed Both
5
Signed into Law
119th
Congress
2025-03-27
Introduced
11
Cosponsors
HR
ⓘ
Type

Sponsor

Ann Wagner
Ann Wagner
Republican · MO · Representative
Votes with party: 97.8% (593 recorded votes)

Full profile: /officials/W000812

Source: Congress.gov · FEC

Cosponsors (11)

Members who have signed on to support this bill since introduction. Source: Congress.gov.

Latest Action

The most recent step in the bill's legislative path. Committee Activity below shows referrals and reports; the full action-by-action history including floor proceedings lives at Congress.gov →

Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

2026-07-13

Source: Congress.gov

Committee Activity

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Plain-English Summary

Financial Exploitation Prevention Act of 2025 This bill establishes procedures for delaying the redemption of certain securities if an investment company or agent believes that an older individual or an individual with certain impairments has been financially exploited. Specifically, the bill allows for the delay of the redemption of a security issued by an open-end investment management company and serviced by a transfer agent if the company or agent reasonably believes the redemption involves the financial exploitation of an individual (1) age 65 or older, or (2) age 18 or older who is unable to protect his or her own interests due to a mental or physical impairment. (Open-end investment management companies offer securities in pooled investment vehicles such as mutual funds. Transfer agents facilitate certain transactions for corporations and investment companies, including dividend distribution and change of securities ownership.) The company may initially delay the redemption for up to 15 days and, upon making a determination of exploitation, may delay the redemption an additional 10 days. A state regulator, appropriate administrative agency, or court may extend this period. In the event of delay, the company must hold the amounts related to the redemption in a demand deposit account. The bill also establishes notification requirements. The bill requires the registered open-end investment company and transfer agent to notify the Securities and Exchange Commission (SEC) if they elect to comply with the procedures established under this bill. Additionally, the SEC must make recommendations to address the financial exploitation of these adults.

Plain-English rewrite of the Congressional Research Service summary published on Congress.gov. Cached and reviewed.

Subjects

Finance and Financial Sector

Full Bill Text

Verbatim text published on Congress.gov via GovInfo. Use Cmd+F / Ctrl+F to search within this excerpt.

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [H.R. 2478 Reported in House (RH)] <DOC> Union Calendar No. 313 119th CONGRESS 1st Session H. R. 2478 [Report No. 119-361] To amend the Investment Company Act of 1940 to postpone the date of payment or satisfaction upon redemption of certain securities in the case of the financial exploitation of specified adults, and for other purposes. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES March 27, 2025 Mrs. Wagner (for herself, Mr. Gottheimer, Mr. Garbarino, Mr. Steil, Mrs. Kim, Ms. Perez, and Mr. Lawler) introduced the following bill; which was referred to the Committee on Financial Services November 4, 2025 Additional sponsors: Mr. Huizenga, Mr. Vindman, Mr. Fields, Mr. Sessions, and Mr. Nunn of Iowa November 4, 2025 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on March 27, 2025] _______________________________________________________________________ A BILL To amend the Investment Company Act of 1940 to postpone the date of payment or satisfaction upon redemption of certain securities in the case of the financial exploitation of specified adults, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Financial Exploitation Prevention Act of 2025''. SEC. 2. REDEMPTION OF CERTAIN SECURITIES POSTPONED. (a) In General.--Section 22 of the Investment Company Act of 1940 (15 U.S.C. 80a-22) is amended by adding at the end the following: ``(h) Requirements With Respect to Non-institutional Direct At-fund Accounts.-- ``(1) Election.-- ``(A) In general.--A registered open-end investment company and a transfer agent described under paragraph (2) may elect to comply with the requirements under paragraph (2) and subsection (i) by notifying the Commission of such election. ``(B) Effect of election.--Paragraph (2) and subsection (i) shall only apply to a registered open- end investment company and a transfer agent that have made the election under subparagraph (A). ``(2) Requirements.--In the case of a customer who is a holder of a non-institutional account held directly with a registered open-end investment company and serviced by a transfer agent (a `direct-at-fund account'), the company and transfer agent shall-- ``(A) request from such customer the name and contact information of at least one individual who-- ``(i) is at the time of such request an adult; and ``(ii) may be contacted with respect to such account; ``(B) document and retain the information received pursuant to subparagraph (A); and ``(C) disclose to such customer in writing (including through electronic delivery) that such company or transfer agent may contact an individual specified pursuant to subparagraph (A) with respect to the account of such customer to-- ``(i) address possible financial exploitation of such customer; ``(ii) confirm the contact information or health status of the customer; or ``(iii) identify any legal guardian, executor, trustee, or holder of a power of attorney of the customer. ``(i) Redemption of Certain Securities Postponed.-- ``(1) In general.--Notwithstanding subsection (e), a registered open-end investment company or a transfer agent acting on behalf of such company may postpone the date of payment or satisfaction upon redemption of any redeemable security in accordance with its terms for more than seven days after the tender of such security to such company or its agent designated for that purpose for redemption if such company or agent reasonably believes that-- ``(A) the redemption is requested by a security…
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holder who is a specified adult; and ``(B) financial exploitation has occurred, is occurring, or has been attempted with respect to such redemption. ``(2) Duration.-- ``(A) In general.--Except as provided in subparagraphs (B) and (C), a registered open-end investment company or a transfer agent acting on behalf of such company may postpone the date of payment or satisfaction upon redemption of a redeemable security under paragraph (1) for a period of not more than 15 business days. ``(B) Extension upon determination of exploitation.--The period described in subparagraph (A) may be extended by an additional 10 business days if the registered open-end investment company or a transfer agent acting on behalf of such company-- ``(i) reasonably believes that-- ``(I) the redemption is requested by a security holder who is a specified adult; and ``(II) financial exploitation has occurred, is occurring, or has been attempted with respect to such redemption; ``(ii) subject to subparagraph (D), not later than 2 days after making a determination under clause (i), notifies the individuals specified by such security holder under subsection (h)(2)(A) in writing (including through electronic delivery) of the extension of the period described in subparagraph (A) under this subparagraph and the reason for such extension; ``(iii) initiates an internal review of the facts and circumstances relating to the determination under clause (i); ``(iv) holds amounts related to the delayed payment or satisfaction upon redemption of the redeemable security in a demand deposit account; and ``(v) documents and retains records related to carrying out clause (iv) and includes such records in the first required account statement of the security holder provided after the date on which the determination is made under clause (i). ``(C) Extension by government.--A State regulator, administrative agency of competent jurisdiction, or court of competent jurisdiction may extend the period described in subparagraph (A). ``(D) Notification.-- ``(i) Exception.--Subparagraph (B)(ii) shall not apply if a registered open-end investment company or transfer agent acting on behalf of such company reasonably believes that an individual required to be notified under such subparagraph is, has been, or will subject the security holder who identified such individual under subsection (h)(2)(A) to financial exploitation. ``(ii) Reasonable efforts.--An open-end investment company or transfer agent acting on behalf of such company shall be considered in compliance with subparagraph (B)(ii) if such company or transfer agent makes a reasonable effort to contact the individuals specified by a security holder under subsection (h)(2)(A). ``(E) Internal procedures.--An open-end investment company or transfer agent acting on behalf of such company shall establish procedures to carry out the requirements under this subsection, including procedures-- ``(i) related to the identification and reporting of matters related to the financial exploitation of specified adults; ``(ii) to determine whether to release or reinvest delayed redemption proceeds, taking into account the facts and circumstances of each case, should the internal review under subparagraph (B)(iii) support the reasonable belief described in subparagraph (B)(i); ``(iii) identifying each employee of the company or transfer agent with authority to establish, extend, or terminate a period described in paragraph (1) or subparagraph (A); ``(iv) in the case of a transfer agent, that are reasonably designed to ensure that the employees of such transfer agent comply with this subsection; and ``(v) in the case of an open-end investment company, establishing periodic reporting requirements under which a transfer agent acting on behalf of such company shall notify such company of-- ``(I) each extension under subparagraph (B) authorized by such transfer agent; ``(II) each finding by the transfer agent under subparagraph (B)(i); ``(III) each notification under subparagraph (B)(ii) carried out by such transfer agent; and ``(IV) the results of each internal review initiated by the transfer agent under subparagraph (B)(iii). ``(F) Information included in certain statements.-- An open-end investment company shall include in each prospectus or statement of additional information a notification that the company or transfer agent acting on behalf of such company may postpone redemption of certain securities under this subsection. ``(G) Record retention.--An open-end investment company or transfer agent acting on behalf of such company shall-- ``(i) document and retain records of-- ``(I) each postponement of redemption under subparagraph (A), (B), or (C); ``(II) each finding under subparagraph (B)(i); ``(III) the name and position of each employee described in subparagraph (E)(iii); ``(IV) each notification carried out under subparagraph (B)(ii); and ``(V) the results of each internal review initiated under subparagraph (B)(iii); and ``(ii) make such records available to the Commission at the request of the Commission. ``(3) Specified adult defined.--In this subsection, the term `specified adult' means-- ``(A) an individual age 65 or older; or ``(B) an individual age 18 or older who a registered open-end investment company or a transfer agent acting on behalf of such company reasonably believes has a mental or physical impairment that renders the individual unable to protect the individual's own interests.''. (b) Regulatory and Legislative Recommendations.-- (1) In general.--Not later than 1 year after the date of the enactment of this section, the Securities and Exchange Commission, in consultation with the entities specified in paragraph (2), shall submit to Congress a report that includes recommendations regarding the regulatory and legislative changes necessary to address the financial exploitation of security holders who are specified adults (as defined in subsection (i)(3) of section 22 of the Investment Company Act of 1940 (15 U.S.C. 80a-22), as added by this section). (2) Consultation.--The entities specified in this paragraph are as follows: (A) The Commodity Futures Trading Commission. (B) The Director of the Bureau of Consumer Financial Protection. (C) The Financial Industry Regulatory Authority. (D) The North American Securities Administrators Association. (E) The Board of Governors of the Federal Reserve System. (F) The Comptroller of the Currency. (G) The Federal Deposit Insurance Corporation. Union Calendar No. 313 119th CONGRESS 1st Session H. R. 2478 [Report No. 119-361] _______________________________________________________________________ A BILL To amend the Investment Company Act of 1940 to postpone the date of payment or satisfaction upon redemption of certain securities in the case of the financial exploitation of specified adults, and for other purposes. _______________________________________________________________________ November 4, 2025 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed
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