I
119THCONGRESS
1
STSESSION 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 pur-
poses.
IN THE HOUSE OF REPRESENTATIVES
MARCH27, 2025
Mrs. W
AGNER(for herself, Mr. GOTTHEIMER, Mr. GARBARINO, Mr. STEIL,
Mrs. K
IM, Ms. PEREZ, and Mr. LAWLER) introduced the following bill;
which was referred to the Committee on Financial Services
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 exploi-
tation of specified adults, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Financial Exploitation 4
Prevention Act of 2025’’. 5
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SEC. 2. REDEMPTION OF CERTAIN SECURITIES POST-1
PONED. 2
(a) I
NGENERAL.—Section 22 of the Investment 3
Company Act of 1940 (15 U.S.C. 80a–22) is amended by 4
adding at the end the following: 5
‘‘(h) R
EQUIREMENTSWITHRESPECT TONON-INSTI-6
TUTIONALDIRECTAT-FUNDACCOUNTS.— 7
‘‘(1) E
LECTION.— 8
‘‘(A) I
N GENERAL.—A registered open-end 9
investment company and a transfer agent de-10
scribed under paragraph (2) may elect to com-11
ply with the requirements under paragraph (2) 12
and subsection (i) by notifying the Commission 13
of such election. 14
‘‘(B) E
FFECT OF ELECTION .—Paragraph 15
(2) and subsection (i) shall only apply to a reg-16
istered open-end investment company and a 17
transfer agent that have made the election 18
under subparagraph (A). 19
‘‘(2) R
EQUIREMENTS.—In the case of a cus-20
tomer who is a holder of a non-institutional account 21
held directly with a registered open-end investment 22
company and serviced by a transfer agent (a ‘direct- 23
at-fund account’), the company and transfer agent 24
shall— 25
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‘‘(A) request from such customer the name 1
and contact information of at least one indi-2
vidual who— 3
‘‘(i) is at the time of such request an 4
adult; and 5
‘‘(ii) may be contacted with respect to 6
such account; 7
‘‘(B) document and retain the information 8
received pursuant to subparagraph (A); and 9
‘‘(C) disclose to such customer in writing 10
(including through electronic delivery) that such 11
company or transfer agent may contact an indi-12
vidual specified pursuant to subparagraph (A) 13
with respect to the account of such customer 14
to— 15
‘‘(i) address possible financial exploi-16
tation of such customer; 17
‘‘(ii) confirm the contact information 18
or health status of the customer; or 19
‘‘(iii) identify any legal guardian, ex-20
ecutor, trustee, or holder of a power of at-21
torney of the customer. 22
‘‘(i) R
EDEMPTION OF CERTAINSECURITIESPOST-23
PONED.— 24
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‘‘(1) IN GENERAL.—Notwithstanding subsection 1
(e), a registered open-end investment company or a 2
transfer agent acting on behalf of such company 3
may postpone the date of payment or satisfaction 4
upon redemption of any redeemable security in ac-5
cordance with its terms for more than seven days 6
after the tender of such security to such company or 7
its agent designated for that purpose for redemption 8
if such company or agent reasonably believes that— 9
‘‘(A) the redemption is requested by a se-10
curity holder who is a specified adult; and 11
‘‘(B) financial exploitation has occurred, is 12
occurring, or has been attempted with respect 13
to such redemption. 14
‘‘(2) D
URATION.— 15
‘‘(A) I
N GENERAL.—Except as provided in 16
subparagraphs (B) and (C), a registered open- 17
end investment company or a transfer agent 18
acting on behalf of such company may postpone 19
the date of payment or satisfaction upon re-20
demption of a redeemable security under para-21
graph (1) for a period of not more than 15 22
business days. 23
‘‘(B) E
XTENSION UPON DETERMINATION 24
OF EXPLOITATION.—The period described in 25
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subparagraph (A) may be extended by an addi-1
tional 10 business days if the registered open- 2
end investment company or a transfer agent 3
acting on behalf of such company— 4
‘‘(i) reasonably believes that— 5
‘‘(I) the redemption is requested 6
by a security holder who is a specified 7
adult; and 8
‘‘(II) financial exploitation has 9
occurred, is occurring, or has been at-10
tempted with respect to such redemp-11
tion; 12
‘‘(ii) subject to subparagraph (D), not 13
later than 2 days after making a deter-14
mination under clause (i), notifies the indi-15
viduals specified by such security holder 16
under subsection (h)(2)(A) in writing (in-17
cluding through electronic delivery) of the 18
extension of the period described in sub-19
paragraph (A) under this subparagraph 20
and the reason for such extension; 21
‘‘(iii) initiates an internal review of 22
the facts and circumstances relating to the 23
determination under clause (i); 24
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‘‘(iv) holds amounts related to the de-1
layed payment or satisfaction upon re-2
demption of the redeemable security in a 3
demand deposit account; and 4
‘‘(v) documents and retains records 5
related to carrying out clause (iv) and in-6
cludes such records in the first required 7
account statement of the security holder 8
provided after the date on which the deter-9
mination is made under clause (i). 10
‘‘(C) E
XTENSION BY GOVERNMENT .—A 11
State regulator, administrative agency of com-12
petent jurisdiction, or court of competent juris-13
diction may extend the period described in sub-14
paragraph (A). 15
‘‘(D) N
OTIFICATION.— 16
‘‘(i) E
XCEPTION.—Subparagraph 17
(B)(ii) shall not apply if a registered open- 18
end investment company or transfer agent 19
acting on behalf of such company reason-20
ably believes that an individual required to 21
be notified under such subparagraph is, 22
has been, or will subject the security holder 23
who identified such individual under sub-24
section (h)(2)(A) to financial exploitation. 25
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‘‘(ii) REASONABLE EFFORTS .—An 1
open-end investment company or transfer 2
agent acting on behalf of such company 3
shall be considered in compliance with sub-4
paragraph (B)(ii) if such company or 5
transfer agent makes a reasonable effort to 6
contact the individuals specified by a secu-7
rity holder under subsection (h)(2)(A). 8
‘‘(E) I
NTERNAL PROCEDURES .—An open- 9
end investment company or transfer agent act-10
ing on behalf of such company shall establish 11
procedures to carry out the requirements under 12
this subsection, including procedures— 13
‘‘(i) related to the identification and 14
reporting of matters related to the finan-15
cial exploitation of specified adults; 16
‘‘(ii) to determine whether to release 17
or reinvest delayed redemption proceeds, 18
taking into account the facts and cir-19
cumstances of each case, should the inter-20
nal review under subparagraph (B)(iii) 21
support the reasonable belief described in 22
subparagraph (B)(i); 23
‘‘(iii) identifying each employee of the 24
company or transfer agent with authority 25
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to establish, extend, or terminate a period 1
described in paragraph (1) or subpara-2
graph (A); 3
‘‘(iv) in the case of a transfer agent, 4
that are reasonably designed to ensure that 5
the employees of such transfer agent com-6
ply with this subsection; and 7
‘‘(v) in the case of an open-end invest-8
ment company, establishing periodic re-9
porting requirements under which a trans-10
fer agent acting on behalf of such company 11
shall notify such company of— 12
‘‘(I) each extension under sub-13
paragraph (B) authorized by such 14
transfer agent; 15
‘‘(II) each finding by the transfer 16
agent under subparagraph (B)(i); 17
‘‘(III) each notification under 18
subparagraph (B)(ii) carried out by 19
such transfer agent; and 20
‘‘(IV) the results of each internal 21
review initiated by the transfer agent 22
under subparagraph (B)(iii). 23
‘‘(F) I
NFORMATION INCLUDED IN CERTAIN 24
STATEMENTS.—An open-end investment com-25
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pany shall include in each prospectus or state-1
ment of additional information a notification 2
that the company or transfer agent acting on 3
behalf of such company may postpone redemp-4
tion of certain securities under this subsection. 5
‘‘(G) R
ECORD RETENTION .—An open-end 6
investment company or transfer agent acting on 7
behalf of such company shall— 8
‘‘(i) document and retain records of— 9
‘‘(I) each postponement of re-10
demption under subparagraph (A), 11
(B), and (C); 12
‘‘(II) each finding under subpara-13
graph (B)(i); 14
‘‘(III) the name and position of 15
each employee described in subpara-16
graph (E)(iii); 17
‘‘(IV) each notification carried 18
out under subparagraph (B)(ii); and 19
‘‘(V) the results of each internal 20
review initiated under subparagraph 21
(B)(iii); and 22
‘‘(ii) make such records available to 23
the Commission at the request of the Com-24
mission. 25
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‘‘(3) SPECIFIED ADULT DEFINED .—In this sub-1
section, the term ‘specified adult’ means— 2
‘‘(A) an individual age 65 or older; or 3
‘‘(B) an individual age 18 or older who a 4
registered open-end investment company or a 5
transfer agent acting on behalf of such com-6
pany reasonably believes has a mental or phys-7
ical impairment that renders the individual un-8
able to protect the individual’s own interests.’’. 9
(b) R
ECOMMENDATIONS .— 10
(1) I
N GENERAL.—Not later than 1 year after 11
the date of the enactment of this section, the Securi-12
ties and Exchange Commission, in consultation with 13
the entities specified in paragraph (2), shall submit 14
to Congress a report that includes recommendations 15
regarding the regulatory and legislative changes nec-16
essary to address the financial exploitation of secu-17
rity holders who are specified adults (as defined in 18
subsection (i)(3) of section 22 of the Investment 19
Company Act of 1940 (15 U.S.C. 80a–22), as added 20
by this section). 21
(2) C
ONSULTATION.—The entities specified in 22
this paragraph are as follows: 23
(A) The Commodity Futures Trading 24
Commission. 25
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(B) The Director of the Bureau of Con-1
sumer Financial Protection. 2
(C) The Financial Industry Regulatory Au-3
thority. 4
(D) The North American Securities Ad-5
ministrators Association. 6
(E) The Board of Governors of the Fed-7
eral Reserve System. 8
(F) The Comptroller of the Currency. 9
(G) The Federal Deposit Insurance Cor-10
poration. 11
Æ
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