Financial Exploitation Prevention Act of 2025

119th Congress Introduced by Cleo Fields and 10 co-sponsors

The Financial Exploitation Prevention Act allows investment companies to delay redemption payments for vulnerable adults suspected of financial exploitation, enhancing their protection.

Motion to reconsider laid on the table Agreed to without objection.

Purpose and Intent

The Financial Exploitation Prevention Act of 2025 aims to enhance protections for specified adults against financial exploitation in the context of redeeming securities. The bill seeks to amend the Investment Company Act of 1940 to allow for the postponement of redemption payments when there is a reasonable belief that financial exploitation has occurred or is occurring.

Key Provisions

The bill introduces several important changes to the Investment Company Act of 1940:

Postponement of Redemption Payments:

Registered open-end investment companies and their transfer agents can postpone the payment or satisfaction upon redemption of securities for more than seven days if they suspect financial exploitation of a specified adult.
The initial postponement can last up to 15 business days, with a possible extension of an additional 10 business days if further investigation is warranted.

Requirements for Direct-at-Fund Accounts:

Investment companies must request and document the contact information of at least one adult individual designated by the customer for communication regarding their account.
Companies must inform customers that they may contact this designated individual to address potential financial exploitation or to confirm the customer’s status.

Notification and Documentation:

If a postponement occurs, companies must notify the designated individual within two days of the decision and document the reasons for the extension.
Companies are required to hold the delayed payment amounts in a demand deposit account and maintain records related to the postponement.

Exemptions from Notification:

Notification to the designated individual may be waived if there is a belief that this person may be involved in the financial exploitation of the customer.

Affected Parties

Specified Adults: Primarily older adults or individuals with disabilities who may be vulnerable to financial exploitation.

Investment Companies: Registered open-end investment companies and their transfer agents will need to implement new procedures and documentation practices.

Designated Contacts: Individuals named by customers who may be contacted regarding potential exploitation.

Procedural Aspects

The bill was introduced on March 27, 2025, and has undergone several legislative actions:

Reported (Amended) by the Committee on Financial Services on November 4, 2025.
Ordered to be reported by a unanimous vote of 50-0 on September 16, 2025.
Placed on the Union Calendar as Calendar No. 313 on November 4, 2025.

Conclusion

The Financial Exploitation Prevention Act of 2025 represents a significant step towards safeguarding vulnerable adults from financial exploitation in the investment sector. By allowing for the postponement of redemption payments and requiring enhanced communication protocols, the bill aims to create a more secure financial environment for at-risk individuals.

Bill