Financial Exploitation Prevention Act of 2025

The Financial Exploitation Prevention Act of 2025 amends the Investment Company Act of 1940, empowering registered open-end investment companies and their transfer agents to combat the financial exploitation of vulnerable adults. It allows these entities to elect to implement new requirements, including requesting and retaining emergency contact information for customers with direct-at-fund accounts. This contact information can be used to address suspected exploitation, confirm customer health, or identify legal representatives. A core provision permits the postponement of security redemptions for more than seven days if the company or agent reasonably believes a specified adult is experiencing financial exploitation. A specified adult is defined as an individual aged 65 or older, or an individual aged 18 or older with a mental or physical impairment preventing them from protecting their own interests. The initial postponement can last up to 15 business days and may be extended by an additional 10 business days if exploitation is still suspected, an internal review is initiated, and designated contacts are notified, unless they are the suspected exploiter. Companies and transfer agents must establish internal procedures for identifying and reporting exploitation, managing delayed proceeds, and ensuring compliance. They are also required to disclose the possibility of redemption postponement in their prospectuses and maintain detailed records of all such actions. Finally, the bill directs the Securities and Exchange Commission to consult with various financial regulators and submit a report to Congress within one year, recommending further legislative and regulatory changes to protect specified adults from financial exploitation.