Financial Exploitation Prevention Act of 2025
Floor Speech
BREAK IN TRANSCRIPT
Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2478) 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, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 2478
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 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.
Mr. Speaker, I include in the Record the Congressional Budget Office estimate for this bill. H.R. 2478, FINANCIAL EXPLOITATION PREVENTION ACT OF 2025, AS REPORTED BY
THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON NOVEMBER 4, 2025 ------------------------------------------------------------------------ By Fiscal Year, Millions of Dollars-- ----------------------------------- 2026 2026-2031 2026-2036 ------------------------------------------------------------------------ Direct Spending (Outlays)........... * * * Revenues............................ * * * Increase or Decrease (-) in the * * * Deficit............................ Spending Subject to Appropriation * * not (Outlays).......................... estimated ------------------------------------------------------------------------ * = between -$500,000 and $500,000.
Increases net direct spending in any of the four consecutive 10-year periods beginning in 2037? No.
Increases on-budget deficits in any of the four consecutive 10-year periods beginning in 2037? No.
Statutory pay-as-you-go procedures apply? Yes.
Mandate Effects:
Contains intergovernmental mandate? No.
Contains private-sector mandate? Yes, under threshold.
The bill would:
Allow certain investment companies and their agents to postpone payments for the redemption of securities for up to 15 business days when they suspect the request of such action is the result of the exploitation of one or more people age 65 or older or who have impairments that keep them from protecting their own interests.
Require the Securities and Exchange Commission (SEC) to report to the Congress within one year on regulatory and legislative policies that could mitigate the financial exploitation of such people.
Direct five federal agencies to consult with the SEC in preparing that report.
Impose mandates on financial institutions if federal financial regulators increase fees to implement the bill.
Estimated budgetary effects would mainly stem from:
Staffing costs for the SEC to study and report on policies that could mitigate financial exploitation of vulnerable adults.
Administrative costs for financial regulators to consult with the SEC. Bill Summary
H.R. 2478 would allow certain investment companies and their agents to postpone payments for the redemption of securities for up to 15 business days when they suspect the request of such action is the result of the exploitation of one or more people who are age 65 or older or who have impairments that keep them from protecting their own interests.
H.R. 2478 also would require the Securities and Exchange Commission (SEC) to report to the Congress within one year on regulatory and legislative policies that could mitigate the financial exploitation of such people. The bill would direct the Commodity Futures Trading Commission (CFTC), Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Federal Reserve to consult with the SEC on the report. Estimated Federal Cost
The costs of the legislation fall within budget function 370 (commerce and housing credit). Basis of Estimate
CBO assumes that the bill will be enacted in fiscal year 2026. The costs for the federal agencies other than the SEC would be minimal. Using information from the agencies, CBO expects that each one would need less than one full-time- equivalent employee to assist the SEC with its report. Direct Spending and Revenues
CBO estimates that enacting H.R. 2478 would decrease revenues and increase direct spending, on net, by less than $500,000 over the 2026-2036 period; the net effect on the deficit would be insignificant.
The operating costs for the FDIC and OCC are classified in the budget as direct spending. Because the OCC is authorized to collect fees from regulated institutions to cover administrative expenses, CBO estimates that enacting H.R. 2478 would increase net direct spending by an insignificant amount over the 2026-2036 period.
Under current law, the CFPB is permanently authorized to spend amounts transferred from the combined earnings of the Federal Reserve in an amount necessary to carry out its responsibilities, subject to a statutory cap that was most recently lowered by the 2025 reconciliation act. That spending is classified as direct spending in the budget. Because CBO expects that, under current law, the CFPB will spend all transferred funds up to its statutory cap in the years that the combined earnings of the Federal Reserve are sufficient to fund the CFPB, we do not attribute any increase in direct spending for the CFPB to this bill. Any spending by the CFPB to implement the bill would necessitate a decrease in spending for other activities of the agency.
Costs incurred by the Federal Reserve reduce remittances to the Treasury, which are recorded in the budget as revenues. CBO estimates that enacting H.R. 2478 would decrease revenues by an insignificant amount over the 2026-2036 period. Spending Subject to Appropriation
In June 2018, the SEC announced that it would not pursue enforcement actions against investment companies or their agents that delay the disbursement of redeemed securities based on the belief that the request was the result of the financial exploitation of a person who is age 65 or older or is an impaired adult.
On that basis and using information from the commission about the cost of similar reports, CBO estimates that implementing H.R. 2478 would cost the SEC $2 million over the 2026-2031 period. CBO expects that the SEC would need five employees, at an average cost of $340,000 per employee, for one year to complete the study and report to the Congress. Because the SEC is authorized to collect fees each year to offset its annual appropriation, CBO expects that the net effect on the commission's discretionary spending over the 2026-2031 period would be negligible, assuming appropriation actions consistent with that authority.
CBO estimates that implementing the bill would increase costs by an insignificant amount for the CFTC, whose administrative costs are subject to appropriation. Pay-As-You-Go Considerations
The Statutory Pay-As-You-Go Act of 2010 establishes budget- reporting and enforcement procedures for legislation affecting direct spending or revenues. CBO estimates that enacting the bill would increase direct spending and decrease revenues by less than $500,000 over the 2026-2036 period; the effect on the deficit would not be significant. Increase in Long-Term Net Direct Spending and Deficits
CBO estimates that enacting H.R. 2478 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2037. Mandates
If federal financial regulators increase fees to offset the costs associated with implementing the bill, H.R. 2478 would increase the cost of an existing mandate on private entities required to pay those assessments. CBO estimates that the incremental cost of the mandate would be small and would fall well below the annual threshold for private-sector mandates established in the Unfunded Mandates Reform Act (UMRA) ($214 million in 2026, adjusted annually for inflation).
H.R. 2478 contains no intergovernmental mandates as defined in UMRA.
Estimate Prepared By: Federal Costs: Sean Christensen, Revenues: Nathaniel Frentz, Mandates: Rachel Austin.
Estimate Reviewed By: Justin Humphrey, Chief, Finance, Housing, and Education Cost Estimates Unit; Kathleen FitzGerald, Chief, Public and Private Mandates Unit; H. Samuel Papenfuss, Deputy Director of Budget Analysis.
Estimate Approved By: Mark P. Hoeller, for Phillip L. Swagel, Director, Congressional Budget Office.
BREAK IN TRANSCRIPT
Mr. HILL of Arkansas. Mr. Speaker, I rise today in full support of our distinguished chair of our Subcommittee on Capital Markets, Mrs. Wagner from Missouri, and her bill that she presents today, the Financial Exploitation Prevention Act of 2025.
Every day, bad actors use fraud, scams, and deception to target the most vulnerable in our society who may be less able to recognize or respond immediately and timely to some form of financial abuse.
Literally, over the last few years, I have been inundated every time I am in my district and community, like my hometown of Little Rock. I hear directly from citizens, the elderly, customers, bankers, small business owners, and all consumers who are grappling with check fraud, wire fraud, and increasingly sophisticated digital scams.
My own family has been victim of check fraud more than one time. I am grateful to the bank that helped identify that with their system.
Mr. Speaker, our financial institutions, our broker-dealers, and our investment companies are all saddled with being in the first line of defense against these schemes that are coming in every shape and form, electronically, by paper, and over the telephone, that are targeting the customers and clients of our financial services companies.
These banks, broker-dealers, and investment companies are uniquely positioned to identify suspicious transactions and unusual account activity. That is the whole mission. We have given those authorities, and they have invested billions in surveillance technology to try to do that.
When warning signs emerge, firms should have the ability to take reasonable steps to put their customers first and to protect those customers from potential harm.
Chair Wagner's bill, H.R. 2478, which has strong bipartisan support and cosponsorship, strengthens those exact protections by providing financial institutions and other financial professionals and investment companies with the legal certainty needed to temporarily delay transactions when financial exploitation or abuse is suspected.
This legislation is part of the Financial Services Committee's broader effort to combat financial fraud and scams plaguing our citizens, our neighbors, particularly seniors, and other vulnerable Americans.
By creating a safe harbor for delaying suspicious transactions and reporting concerns to the appropriate authorities, this bill helps prevent devastating financial losses before they occur.
Protecting Americans from financial exploitation requires strong coordination among families, financial institutions, brokers, financial advisers, and, of course, law enforcement. This bill would help strengthen those partnerships and provide additional tools to safeguard the most vulnerable among us from an avalanche of fraud and abuse.
Importantly, too, this bill is tailored to address suspected exploitation while preserving the rights of customers and maintaining appropriate oversight.
No American should lose their hard-earned money because an investment firm or financial institution lacks the authority or certainty to intervene where there are clear signs of exploitation that were present.
H.R. 2478 is a commonsense, bipartisan measure that helps protect our most vulnerable citizens from the growing number of financial predators.
I thank Chair Wagner and Mr. Gottheimer of New Jersey for their leadership on this important issue.
BREAK IN TRANSCRIPT
Mr. HILL of Arkansas. She has worked on this and has been a leader in every way she can in the House to protect our friends and our neighbors from financial fraud.
Mr. Speaker, I thank the ranking member and Mr. Gottheimer for working with the majority on this bill. I will add that this is a very complex subject across the board trying to protect our seniors and our consumers across the country, particularly in financial services.
I think this bill is a step in the right direction, but we have many other things that the committee has been working on on a bipartisan basis. The Postal Service, the Secret Service, the Federal communications oversight, Federal Trade Commission, all these Federal agencies have influence on whether we are going to beat the criminals at their game. As they get artificial intelligence and new technologies to try to get in the pocketbooks, in the investment statements, into the credit cards of American consumers and households, know that people like Ann Wagner, Josh Gottheimer, Maxine Waters, and French Hill are saying no.
We want to give the tools to our financial institutions and enforcement to do something about it, but it also takes an education of our families. You can't turn your password over to people. You can't trust people when they call you on the phone and tell you to bring $5,000 down to the courthouse or put money in a bitcoin ATM. We also have that obligation every day on this House floor to educate our families to trust but verify when somebody approaches them about their very, very valuable financial information.
A Member of Congress from North Carolina called me and said: Is there any way you would be willing to talk to this lawyer, this family in North Carolina? Husband and wife retired, the spouse, the wife, said: I have been called. I need to send $250,000 for this investment opportunity. The husband said: I don't know that we should do that. She said: Well, I have done my homework. She called the bank, Mr. Speaker, and said: Would you wire $250,000 to this investment opportunity. And the banker said: Ms. Jones, I mean, are you sure? You have never done this before. You don't have that kind of money.
Mr. Speaker, I use that as a small example. It didn't turn out well, but it is about educating. Again, the work that Chairwoman Wagner and Representative Gottheimer are doing is what we need to be doing. We are going to continue to bring bills to this House floor that protect our households from the fraudsters that are now going parabolic in their talent to steal our money through artificial intelligence, cell phones, text messages, emails, romance schemes, whatever that is, but she pointed it out, and I am with her. We are going to do this together.
Mr. Speaker, I urge a ``yes'' vote on this bill. I thank the gentlewoman for bringing it to the floor today, and I yield back the balance of my time.
BREAK IN TRANSCRIPT
Source