119-hr2478

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2478 Reported in House

    (RH) ]

<DOC>

 Union Calendar No. 313
119th CONGRESS
 1st Session
 H. R. 2478

 [Report No. 119-361]

 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.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 March 27, 2025

 Mrs. Wagner (for herself, Mr. Gottheimer, Mr. Garbarino, Mr. Steil, 
 Mrs. Kim, Ms. Perez, and Mr. Lawler) introduced the following bill; 
 which was referred to the Committee on Financial Services

 November 4, 2025

 Additional sponsors: Mr. Huizenga, Mr. Vindman, Mr. Fields, Mr. 
 Sessions, and Mr. Nunn of Iowa

 November 4, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
 in italic]
 [For text of introduced bill, see copy of bill as introduced on March 
 27, 2025]

_______________________________________________________________________

 A BILL

 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.
 Union Calendar No. 313

119th CONGRESS

 1st Session

 H. R. 2478

 [Report No. 119-361]

_______________________________________________________________________

 A BILL

 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.

_______________________________________________________________________

 November 4, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed