Congressional lawmakers have approved a measure aimed at protecting senior citizens and vulnerable adults from financial fraud, Wealth Management reported.
In a bipartisan vote of 414-2, the House of Representatives passed H.R. 2478, the Financial Exploitation Prevention Act of 2025.
The bill would give open-end investment companies, including mutual funds, most exchange-traded funds and their transfer agents, the ability to pause redemption requests from people 65 and older or people with disabilities when the institution suspects financial fraud or exploitation. Transfer agents maintain shareholder records and process transactions.
“Many seniors and vulnerable adults need that extra layer of defense from fraud that has become tragically common in today’s world, and [this bill] is a commonsense step to protecting parents, grandparents and families in communities around our country,” said Rep. Ann Wagner, R-Mo., a lead sponsor of the bill.
The measure stipulates that when financial professionals reasonably believe that a transaction results from financial exploitation, they can delay the redemption of securities for an initial 15 business days. This pause can be extended by an additional 10 business days, or longer if mandated by state regulators or a court order.
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 registered open-end investment company and transfer agent would be required to notify the Securities and Exchange Commission 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.
The protections specifically target “specified adults,” defined as individuals aged 65 or older and vulnerable adults with mental or physical impairments that limit their ability to protect their own interests. This ensures that those most at risk receive enhanced safeguards while maintaining appropriate oversight to prevent abuse of the pause mechanism.
A similar bill has been proposed in the Senate, though it remained unclear if or when that chamber’s banking committee will consider the legislation.
The bill is one of the ways authorities are trying to combat the growing threat of financial fraud. Fraudsters are becoming more sophisticated with the help of artificial intelligence that makes it harder for people to avoid scams,
The impact of fraud can be particularly damaging for older investors, according to the Financial Industry Regulatory Authority. “Americans over age 60 lost more than $4.8 billion to fraud in 2024,” FINRA stated. “This estimate represents not only devastating financial losses but also the profound personal toll fraud takes on victims, including embarrassment, isolation and diminished quality of life. Moreover, the actual magnitude of fraud losses is unknown due to underreporting.”
The authority added, “Unlike younger investors who may have years of future earnings to rebuild their financial security, senior investors are often living on fixed incomes derived from a lifetime of savings, with limited or no ability to offset significant losses.”
FINRA already allows brokers and money managers to temporarily freeze requests that are from older adults who may be the victims of exploitation
Hyman Cotter PC routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter PC at 833-665-0784 or through our online contact form for a no-cost evaluation of your matter.
