House backs an emergency brake on elder fraud

A bipartisan bill supported by asset management and retirement industry groups has passed the U.S. House and awaits action in the Senate.

House Resolution 2478, dubbed the Financial Exploitation Prevention Act of 2025, would create procedures to delay redemption of certain securities in situations when an agent or investment company believes an individual was financially exploited. It would apply to individuals 65 or older or who have a mental or physical impairment. The delay may be up to 15 days initially and, once a determination of exploitation has been made, 10 more days.

Notification requirements would also be established, and the SEC would be required to make recommendations for addressing financial exploitation of these groups of individuals.

The bill was sponsored by Ann Wagner, a Republican from Missouri, and co-sponsored by Rep. Josh Gottheimer, a Democrat from New Jersey, Rep. Andrew R. Garbarino, a Republican from New York, and Rep. Bryan Steil, a Republican from Wisconsin. The House passed it by a vote of 414 to 2 on June 25.

The Insured Retirement Institute (IRI), a trade group representing asset managers, life insurers, broker-dealers, banks and more, supported the legislation.

"For retirees and those nearing retirement, financial exploitation can erase decades of disciplined saving in a matter of days, leaving victims with little opportunity to rebuild their financial security. Providing a reasonable period to investigate suspected exploitation can make the difference between protecting a victim's retirement savings and losing those assets forever," IRI Chief Government and Political Affairs Officer Paul Richman and Director of Government & Political Affairs John B. Jennings wrote in a June 15 letter to Wagner, who is chairwoman of the House Financial Services Committee Subcommittee on Capital Markets, and Gottheimer, a member of the subcommittee.

READ MORE: The vital role of financial advisors in stopping fraud and elder abuse

The Financial Services Institute (FSI), which advocates for independent financial advisors and independent financial services firms, urged the Senate to pass the legislation also.

"Financial advisors are often on the front lines of detecting suspicious activity and helping protect clients from fraud and exploitation," FSI President and CEO Dale Brown said in a statement. "This bill would equip mutual funds with tools to better help protect vulnerable investors, while ensuring appropriate safeguards are in place."

Another association encouraging Senate passage of the bill is the Investment Company Institute (ICI), which is a trade group representing asset managers and individual investors served by that industry.

"1 in 5 Americans over the age of 65 has been a victim of financial exploitation, experiencing estimated losses of $2.9 billion," ICI President and CEO Eric J. Pan said in a statement. "The bill would give our industry better tools to address suspected financial exploitation and abuse of seniors and those with disabilities."

READ MORE: FINRA seeks to extend account holds to combat elder fraud

In January 2023, the House passed a previous version of the bill by a unanimous vote. The Senate did not vote on the bill.