Financial exploitation can have devastating consequences, particularly for older adults and individuals who may be unable to fully protect their own financial interests. A bill currently before Congress seeks to provide another tool to help financial institutions intervene when exploitation is suspected.
The Financial Exploitation Prevention Act of 2025 was introduced in the U.S. House of Representatives on March 27, 2025. The legislation would establish procedures allowing certain investment companies and transfer agents to temporarily delay the redemption of securities when there is a reasonable belief that the transaction involves the financial exploitation of a vulnerable investor.
What the Bill Would Do
The legislation would apply when suspected exploitation involves:
- An individual age 65 or older; or
- An individual age 18 or older who is unable to protect their own interests due to a mental or physical impairment.
Under the proposed legislation, a registered open-end investment company or transfer agent could initially delay a redemption for up to 15 days when there is reasonable belief that financial exploitation may be occurring. If exploitation is subsequently determined, the delay could be extended for an additional 10 days. A state regulator, appropriate administrative agency or court could authorize a longer delay.
The legislation also establishes requirements around how funds are held during a delay and when appropriate parties must be notified. Investment companies and transfer agents electing to follow these procedures would also be required to notify the Securities and Exchange Commission (SEC).
In addition, the bill directs the SEC to develop recommendations for further addressing the financial exploitation of older and vulnerable adults.
Why It Matters
Financial professionals can occupy a unique position in the fight against financial exploitation. Because of the relationships they develop with clients, they may be among the first to notice unusual requests, sudden changes in financial behavior or other circumstances that raise concerns.
At the same time, there can be limits on the actions financial institutions are able to take when suspicious activity is identified. The Financial Exploitation Prevention Act is intended to provide an additional safeguard by creating a defined process through which certain redemptions could be temporarily delayed while concerns are evaluated.
For financial professionals, the legislation is also a reminder of the important role our industry plays in protecting investors—particularly those who may be most vulnerable to fraud, coercion or abuse.
Making Your Perspective Heard
As Congress considers the Financial Exploitation Prevention Act, financial professionals who believe these additional investor protections would be valuable may choose to share their perspective with their elected representatives.
If you would like to express support for the legislation, consider contacting your U.S. senators and asking them to support the Financial Exploitation Prevention Act of 2025. To do so, please use the following link: Ask Your Senator to Support the Financial Exploitation Prevention Act (S. 2840)
Participation is entirely voluntary, but hearing directly from financial professionals can help policymakers better understand the real-world challenges associated with identifying and preventing financial exploitation.
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