House OKs short redemption holds to curb elder fraud

The House on June 25 approved the Financial Exploitation Prevention Act of 2025 by a 414-2 vote. The measure would let mutual funds and other investment companies temporarily delay redemption of certain securities while they investigate suspected financial exploitation of individuals aged 65 or older and those with mental or physical impairments.

Under the bill, an agent or an investment company that suspects exploitation may place an initial hold on a redemption request for up to 15 days. If a determination of exploitation is made, the company may extend the hold for an additional 10 days. The legislation includes requirements to notify designated parties and asks the Securities and Exchange Commission to issue recommendations for preventing abuse of seniors and vulnerable adults.

The bill was introduced by Rep. Ann Wagner (R-Mo.) and is co-sponsored by Rep. Josh Gottheimer (D-N.J.), Rep. Andrew R. Garbarino (R-N.Y.) and Rep. Bryan Steil (R-Wis.). After the House vote, the measure now moves to the Senate for consideration.

Industry trade groups representing asset managers, insurers, broker-dealers and financial advisors supported the bill. Officials from the Insured Retirement Institute wrote in a June 15 letter that, for retirees and those nearing retirement, financial exploitation can erase decades of savings in days and that a reasonable period to investigate suspected exploitation can mean the difference between protecting retirement assets and losing them.

The Financial Services Institute urged the Senate to act, with its president and CEO, Dale Brown, noting that financial advisors are often the first to detect suspicious activity and help protect clients from fraud. The Investment Company Institute highlighted research finding that one in five Americans over 65 has been a victim of financial exploitation, with estimated losses of $2.9 billion, and said the bill would give the industry additional tools to address suspected abuse.

A prior version of the legislation passed the House unanimously in January 2023 but did not receive a Senate vote. Supporters say the updated bill would standardize procedures across funds and provide clearer legal authority for temporary holds while investigations proceed.

If the Senate approves the measure and it becomes law, funds would be able to apply the new procedures once any required rulemaking or guidance is issued and the law takes effect.