Bill Details
HR.2478 - 119th Congress
Status
Latest action
2026-06-25 - Motion to reconsider laid on the table Agreed to without objection.
Introduced Date
2025-03-27
Policy Area
Finance and Financial Sector
Committees
View committees (1)
Sponsors
Cosponsors
View cosponsors (11)
- Rep. Gottheimer, Josh [D-New Jersey-5]
- Rep. Garbarino, Andrew R. [R-New York-2]
- Rep. Steil, Bryan [R-Wisconsin-1]
- Rep. Kim, Young [R-California-40]
- Rep. Perez, Marie Gluesenkamp [D-Washington-3]
- Rep. Lawler, Michael [R-New York-17]
- Rep. Huizenga, Bill [R-Michigan-4]
- Rep. Vindman, Eugene Simon [D-Virginia-7]
- Rep. Fields, Cleo [D-Louisiana-6]
- Rep. Sessions, Pete [R-Texas-17]
- Rep. Nunn, Zachary [R-Iowa-3]
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AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill is meant to help protect older adults and other vulnerable investors from being tricked into cashing out their mutual fund or other open-end investment accounts. It lets a fund company or transfer agent delay paying out redemption money for a short time if they reasonably believe the investor is a “specified adult” and that financial exploitation has happened, is happening, or has been attempted. The bill also asks these companies to collect an emergency contact name and information, tell the customer in writing that they may contact that person if there is a concern, and keep records of any delay. In addition, the Securities and Exchange Commission must study the issue and send Congress recommendations for any needed rule changes or new laws.
- Only fund companies and transfer agents that choose to follow these new rules would be covered.
- A “specified adult” means someone age 65 or older, or someone age 18 or older whom the company reasonably believes has a mental or physical impairment that makes self-protection difficult.
- If there is a concern about financial exploitation, the company may delay a redemption payment for up to 15 business days, with a possible 10-business-day extension in some cases.
- Before extending the delay, the company must do an internal review, try to notify the listed contact person unless that would create risk, hold the money in a demand deposit account, and keep detailed records for regulators.
The bill also requires mutual fund companies to update their prospectus or other disclosure materials to explain that redemptions may be postponed in these situations. The SEC must report to Congress within one year with recommendations on how to better address financial exploitation of vulnerable investors.
Official Summaries
Financial Exploitation Prevention Act of 2025
This bill establishes procedures for delaying the redemption of certain securities if an investment company or agent believes that an older individual or an individual with certain impairments has been financially exploited.
Specifically, the bill allows for the delay of the redemption of a security issued by an open-end investment management company and serviced by a transfer agent if the company or agent reasonably believes the redemption involves the financial exploitation of an individual (1) age 65 or older, or (2) age 18 or older who is unable to protect his or her own interests due to a mental or physical impairment. (Open-end investment management companies offer securities in pooled investment vehicles such as mutual funds. Transfer agents facilitate certain transactions for corporations and investment companies, including dividend distribution and change of securities ownership.)
The company may initially delay the redemption for up to 15 days and, upon making a determination of exploitation, may delay the redemption an additional 10 days. A state regulator, appropriate administrative agency, or court may extend this period. In the event of delay, the company must hold the amounts related to the redemption in a demand deposit account. The bill also establishes notification requirements.
The bill requires the registered open-end investment company and transfer agent to notify the Securities and Exchange Commission (SEC) if they elect to comply with the procedures established under this bill.
Additionally, the SEC must make recommendations to address the financial exploitation of these adults.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2478 Engrossed in House (EH)]
<DOC>
119th CONGRESS
2d Session
H. R. 2478
_______________________________________________________________________
AN ACT
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
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Exploitation Prevention
Act of 2025''.
SEC. 2. REDEMPTION OF CERTAIN SECURITIES POSTPONED.
(a) In General.--Section 22 of the Investment Company Act of 1940
(15 U.S.C. 80a-22) is amended by adding at the end the following:
``(h) Requirements With Respect to Non-institutional Direct At-fund
Accounts.--
``(1) Election.--
``(A) In general.--A registered open-end investment
company and a transfer agent described under paragraph
(2) may elect to comply with the requirements under
paragraph (2) and subsection (i) by notifying the
Commission of such election.
``(B) Effect of election.--Paragraph (2) and
subsection (i) shall only apply to a registered open-
end investment company and a transfer agent that have
made the election under subparagraph (A).
``(2) Requirements.--In the case of a customer who is a
holder of a non-institutional account held directly with a
registered open-end investment company and serviced by a
transfer agent (a `direct-at-fund account'), the company and
transfer agent shall--
``(A) request from such customer the name and
contact information of at least one individual who--
``(i) is at the time of such request an
adult; and
``(ii) may be contacted with respect to
such account;
``(B) document and retain the information received
pursuant to subparagraph (A); and
``(C) disclose to such customer in writing
(including through electronic delivery) that such
company or transfer agent may contact an individual
specified pursuant to subparagraph (A) with respect to
the account of such customer to--
``(i) address possible financial
exploitation of such customer;
``(ii) confirm the contact information or
health status of the customer; or
``(iii) identify any legal guardian,
executor, trustee, or holder of a power of
attorney of the customer.
``(i) Redemption of Certain Securities Postponed.--
``(1) In general.--Notwithstanding subsection (e), a
registered open-end investment company or a transfer agent
acting on behalf of such company may postpone the date of
payment or satisfaction upon redemption of any redeemable
security in accordance with its terms for more than seven days
after the tender of such security to such company or its agent
designated for that purpose for redemption if such company or
agent reasonably believes that--
``(A) the redemption is requested by a security
holder who is a specified adult; and
``(B) financial exploitation has occurred, is
occurring, or has been attempted with respect to such
redemption.
``(2) Duration.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), a registered open-end
investment company or a transfer agent acting on behalf
of such company may postpone the date of payment or
satisfaction upon redemption of a redeemable security
under paragraph (1) for a period of not more than 15
business days.
``(B) Extension upon determination of
exploitation.--The period described in subparagraph (A)
may be extended by an additional 10 business days if
the registered open-end investment company or a
transfer agent acting on behalf of such company--
``(i) reasonably believes that--
``(I) the redemption is requested
by a security holder who is a specified
adult; and
``(II) financial exploitation has
occurred, is occurring, or has been
attempted with respect to such
redemption;
``(ii) subject to subparagraph (D), not
later than 2 days after making a determination
under clause (i), notifies the individuals
specified by such security holder under
subsection (h)(2)(A) in writing (including
through electronic delivery) of the extension
of the period described in subparagraph (A)
under this subparagraph and the reason for such
extension;
``(iii) initiates an internal review of the
facts and circumstances relating to the
determination under clause (i);
``(iv) holds amounts related to the delayed
payment or satisfaction upon redemption of the
redeemable security in a demand deposit
account; and
``(v) documents and retains records related
to carrying out clause (iv) and includes such
records in the first required account statement
of the security holder provided after the date
on which the determination is made under clause
(i).
``(C) Extension by government.--A State regulator,
administrative agency of competent jurisdiction, or
court of competent jurisdiction may extend the period
described in subparagraph (A).
``(D) Notification.--
``(i) Exception.--Subparagraph (B)(ii)
shall not apply if a registered open-end
investment company or transfer agent acting on
behalf of such company reasonably believes that
an individual required to be notified under
such subparagraph is, has been, or will subject
the security holder who identified such
individual under subsection (h)(2)(A) to
financial exploitation.
``(ii) Reasonable efforts.--An open-end
investment company or transfer agent acting on
behalf of such company shall be considered in
compliance with subparagraph (B)(ii) if such
company or transfer agent makes a reasonable
effort to contact the individuals specified by
a security holder under subsection (h)(2)(A).
``(E) Internal procedures.--An open-end investment
company or transfer agent acting on behalf of such
company shall establish procedures to carry out the
requirements under this subsection, including
procedures--
``(i) related to the identification and
reporting of matters related to the financial
exploitation of specified adults;
``(ii) to determine whether to release or
reinvest delayed redemption proceeds, taking
into account the facts and circumstances of
each case, should the internal review under
subparagraph (B)(iii) support the reasonable
belief described in subparagraph (B)(i);
``(iii) identifying each employee of the
company or transfer agent with authority to
establish, extend, or terminate a period
described in paragraph (1) or subparagraph (A);
``(iv) in the case of a transfer agent,
that are reasonably designed to ensure that the
employees of such transfer agent comply with
this subsection; and
``(v) in the case of an open-end investment
company, establishing periodic reporting
requirements under which a transfer agent
acting on behalf of such company shall notify
such company of--
``(I) each extension under
subparagraph (B) authorized by such
transfer agent;
``(II) each finding by the transfer
agent under subparagraph (B)(i);
``(III) each notification under
subparagraph (B)(ii) carried out by
such transfer agent; and
``(IV) the results of each internal
review initiated by the transfer agent
under subparagraph (B)(iii).
``(F) Information included in certain statements.--
An open-end investment company shall include in each
prospectus or statement of additional information a
notification that the company or transfer agent acting
on behalf of such company may postpone redemption of
certain securities under this subsection.
``(G) Record retention.--An open-end investment
company or transfer agent acting on behalf of such
company shall--
``(i) document and retain records of--
``(I) each postponement of
redemption under subparagraph (A), (B),
or (C);
``(II) each finding under
subparagraph (B)(i);
``(III) the name and position of
each employee described in subparagraph
(E)(iii);
``(IV) each notification carried
out under subparagraph (B)(ii); and
``(V) the results of each internal
review initiated under subparagraph
(B)(iii); and
``(ii) make such records available to the
Commission at the request of the Commission.
``(3) Specified adult defined.--In this subsection, the
term `specified adult' means--
``(A) an individual age 65 or older; or
``(B) an individual age 18 or older who a
registered open-end investment company or a transfer
agent acting on behalf of such company reasonably
believes has a mental or physical impairment that
renders the individual unable to protect the
individual's own interests.''.
(b) Regulatory and Legislative Recommendations.--
(1) In general.--Not later than 1 year after the date of
the enactment of this section, the Securities and Exchange
Commission, in consultation with the entities specified in
paragraph (2), shall submit to Congress a report that includes
recommendations regarding the regulatory and legislative
changes necessary to address the financial exploitation of
security holders who are specified adults (as defined in
subsection (i)(3) of section 22 of the Investment Company Act
of 1940 (15 U.S.C. 80a-22), as added by this section).
(2) Consultation.--The entities specified in this paragraph
are as follows:
(A) The Commodity Futures Trading Commission.
(B) The Director of the Bureau of Consumer
Financial Protection.
(C) The Financial Industry Regulatory Authority.
(D) The North American Securities Administrators
Association.
(E) The Board of Governors of the Federal Reserve
System.
(F) The Comptroller of the Currency.
(G) The Federal Deposit Insurance Corporation.
Passed the House of Representatives June 25, 2026.
Attest:
Clerk.
119th CONGRESS
2d Session
H. R. 2478
_______________________________________________________________________
AN ACT
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
purposes.