The "Financial Exploitation Prevention Act of 2025" amends the Investment Company Act of 1940 to protect vulnerable investors from financial exploitation. This bill allows registered open-end investment companies and their transfer agents to postpone the redemption of securities for "specified adults" when there is a reasonable belief of financial exploitation. Companies may elect to request and retain contact information for a trusted individual from non-institutional direct-at-fund account holders, disclosing that this contact may be used to address potential exploitation or confirm customer information. The initial postponement of a redemption payment can last for up to 15 business days . This period can be extended by an additional 10 business days if the company continues to reasonably believe exploitation is occurring, initiates an internal review, and notifies the designated contact person, unless that person is suspected of involvement. State regulators or courts also have the authority to further extend these postponement periods, and companies must establish internal procedures for these actions, including record retention. A "specified adult" is defined as an individual aged 65 or older, or an adult aged 18 or older with a mental or physical impairment that prevents them from protecting their own interests. The bill also mandates that the Securities and Exchange Commission, in consultation with various financial regulatory bodies, submit a report to Congress within one year. This report will include recommendations for necessary regulatory and legislative changes to further address the financial exploitation of specified adults.
The "Financial Exploitation Prevention Act of 2025" amends the Investment Company Act of 1940 to protect vulnerable investors from financial exploitation. This bill allows registered open-end investment companies and their transfer agents to postpone the redemption of securities for "specified adults" when there is a reasonable belief of financial exploitation. Companies may elect to request and retain contact information for a trusted individual from non-institutional direct-at-fund account holders, disclosing that this contact may be used to address potential exploitation or confirm customer information. The initial postponement of a redemption payment can last for up to 15 business days . This period can be extended by an additional 10 business days if the company continues to reasonably believe exploitation is occurring, initiates an internal review, and notifies the designated contact person, unless that person is suspected of involvement. State regulators or courts also have the authority to further extend these postponement periods, and companies must establish internal procedures for these actions, including record retention. A "specified adult" is defined as an individual aged 65 or older, or an adult aged 18 or older with a mental or physical impairment that prevents them from protecting their own interests. The bill also mandates that the Securities and Exchange Commission, in consultation with various financial regulatory bodies, submit a report to Congress within one year. This report will include recommendations for necessary regulatory and legislative changes to further address the financial exploitation of specified adults.