Financial Exploitation Prevention Act of 2025
By enabling investment companies to delay the payment or satisfaction of redeemable securities for a period of up to 15 business days, and potentially extend that delay for an additional 10 days if necessary, the bill provides a safeguard for investors who may not be able to adequately protect their own interests. It empowers companies to proactively address circumstances where a security holder might be subject to exploitation, effectively working to mitigate risks associated with financial scams targeting older adults and other vulnerable groups.
House Bill 2478, titled the Financial Exploitation Prevention Act of 2025, aims to address issues surrounding financial exploitation of vulnerable adults, particularly those aged 65 and older. The bill proposes amendments to the Investment Company Act of 1940, allowing registered open-end investment companies and their transfer agents to postpone redemption of certain securities if they suspect that financial exploitation is occurring with respect to specified adults. This measure is intended to protect vulnerable investors from potentially harmful actions related to their investments.
While the primary objective of HB 2478 is to protect vulnerable adults from financial exploitation, there could potentially be contention surrounding the implementation of these provisions. Concerns may arise regarding the delineation of what constitutes reasonable belief of financial exploitation, along with the possible disruption this may cause to the liquidity of investors who are not under duress. Additionally, defining 'specified adults' in the context of age and mental capacity may lead to debates about the adequacy of measures in place to balance protection with personal agency in investment decisions.
Finance and Financial Sector