Financial Exploitation Prevention Act of 2025

What this does

This bill lets mutual fund companies pause payouts they suspect are the product of elder financial exploitation. It amends Section 22 of the Investment Company Act of 1940. A registered open-end investment company and its transfer agent may opt in to the new rules by notifying the SEC. The rules apply only to firms that elect in, and only to non-institutional accounts held directly with the fund. An electing firm must ask each such customer for the name and contact information of at least one trusted adult, retain that information, and disclose in writing that it may contact that person about possible exploitation. An electing firm may then postpone paying a redemption beyond the normal seven-day limit when it reasonably believes the account holder is a "specified adult" and that financial exploitation has occurred, is occurring, or was attempted. The standard hold runs up to 15 business days and may be extended 10 more business days if the firm reviews the matter and notifies the trusted contact. A state regulator, agency, or court may extend the hold further. The bill defines a "specified adult" as anyone 65 or older, or anyone 18 or older the firm reasonably believes has a mental or physical impairment that leaves them unable to protect their own interests. Separately, the bill directs the SEC to report to Congress within one year with recommended regulatory and legislative changes to address exploitation of these investors, in consultation with named federal and industry bodies.