The Financial Exploitation Prevention Act amends federal investment law to help protect seniors and vulnerable adults from financial exploitation. Under the bill, investment companies and transfer agents that manage mutual funds can voluntarily postpone redemption payments (withdrawals) for up to 15 business days if they reasonably believe a customer age 65 or older—or someone with a mental or physical impairment—is being financially exploited. To use this protection, companies must first collect emergency contact information from customers and notify them in writing that the company may contact these individuals if exploitation is suspected. If a company extends the hold beyond 15 days, it must notify the customer's emergency contact within two days and conduct an internal review; regulators or courts can extend the hold further. The bill requires companies to establish procedures for identifying and reporting exploitation and maintain detailed records of all postponed redemptions for Securities and Exchange Commission review. Additionally, the SEC must submit recommendations to Congress within one year on additional legislative and regulatory changes needed to combat financial exploitation across the broader financial services industry. The bill contains no specific funding amounts and applies only to investment companies and transfer agents that elect to participate.
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