Industry Groups Press Senate at Advance Financial Exploitation Prevention Act
From the desk of Jim Eccleston at Eccleston Law
Several industry associations are urging the U.S. Senate to pass the Financial Exploitation Prevention Act, legislation that would allow mutual fund companies and their transfer agents to delay redemptions when they reasonably suspect elder financial abuse. According to InvestmentNews, the industry associations sent a joint letter, dated Nov. 21, to Senators Bill Hagerty (R-Tenn.) and Ruben Gallego (D-Ariz.), who reintroduced the bipartisan bill in September.
According to the letter, the proposal primarily would affect transactions involving mutual funds. The signatories emphasized the scope of the problem, noting estimates that one in five Americans over age 65 has experienced financial exploitation. The groups argued that the bill would create a critical safeguard by permitting a registered investment company or transfer agent to pause a redemption request if it believes exploitation of a senior or vulnerable investor prompted the transaction.
In addition to the CFP Board, industry associations include the American Securities Association, Financial Planning Association, Financial Services Institute, Finseca, Investment Adviser Association, Investment Company Institute, Insured Retirement Institute, National Association of Insurance and Financial Advisors, National Association of Personal Financial Advisors, and the Securities Industry and Financial Markets Association.
Data cited by InvestmentNews underscores the urgency behind the push. The FBI’s latest internet crime report found that Americans age 60 and older lost $4.88 billion to fraud in 2024, a 43 percent increase from the prior year. Complaints from that age group rose 46 percent to 147,127, while an AARP report estimated that criminals steal $28 billion annually from U.S. adults 60 and older.
Advisors say the bill would address a critical gap in current protections. Ben Simerly, an advisor at Lakehouse Family Wealth, told InvestmentNews that professionals often identify suspected exploitation but lack the authority to stop a transaction. He said the legislation would allow each link in the financial chain to pause activity while regulators review the matter.
The CFP Board stated that the act would empower the Securities and Exchange Commission to make legislative and regulatory recommendations to combat exploitation of seniors and other vulnerable adults. The proposal also would authorize state regulators, courts, and administrative agencies to delay redemptions to conduct investigations.
The Investments & Wealth Institute (IWI) echoed that view, telling InvestmentNews that rules designed to protect seniors serve as essential tools to curb abuse.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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