[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2794 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2794

  To protect older Americans from misleading and fraudulent marketing 
      practices, with the goal of increasing retirement security.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               April 1 (legislative day, March 13), 2008

 Mr. Kohl (for himself and Mr. Vitter) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
  To protect older Americans from misleading and fraudulent marketing 
      practices, with the goal of increasing retirement security.

    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 ``Senior Investor Protection Act of 
2008''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) many seniors are targeted by salespersons and advisers 
        using misleading certifications and professional designations;
            (2) many certifications and professional designations used 
        by salespersons and advisers represent limited training or 
        expertise, and may in fact be of no value with respect to 
        advising seniors on financial and estate planning matters, and 
        far too often, such designations are obtained simply by 
        attending a weekend seminar and passing an open book, multiple 
        choice test;
            (3) many seniors have lost their life savings because 
        salespersons and advisers holding a misleading designation have 
        steered them toward products that were unsuitable for them, 
        given their retirement needs and life expectancies;
            (4) seniors have a right to clearly know whether they are 
        working with a qualified adviser who understands the products 
        and is working in their best interest or a self-interested 
        salesperson or adviser advocating particular products; and
            (5) many existing State laws and enforcement measures 
        addressing the use of certifications, professional 
        designations, and suitability standards in selling financial 
        products to seniors are inadequate to protect senior investors 
        from salespersons and advisers using such designations.

SEC. 3. GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS FROM BEING 
              MISLEAD BY FALSE DESIGNATIONS.

    (a) Definitions.--As used in this Act--
            (1) the term ``misleading designation''--
                    (A) means the use of a purported certification, 
                professional designation, or other credential, that 
                indicates or implies that a salesperson or adviser has 
                special certification or training in advising or 
                servicing seniors; and
                    (B) does not include any legitimate certification, 
                professional designation, license, or other credential, 
                if--
                            (i) it has been offered by an academic 
                        institution having regional accreditation; or
                            (ii) it meets the standards for 
                        certifications, licenses, and professional 
                        designations outlined by the North American 
                        Securities Administrators Association (in this 
                        Act referred to as the ``NASAA'') Model Rule on 
                        the Use of Senior-Specific Certifications and 
                        Professional Designations, or it was issued by 
                        or obtained from any State;
            (2) the term ``financial product'' means securities, 
        insurance products (including insurance products which pay a 
        return, whether fixed or variable), and bank and loan products;
            (3) the term ``misleading or fraudulent marketing'' means 
        the use of a misleading designation in selling or advising a 
        senior in the sale of a financial product;
            (4) the term ``senior'' means any individual who has 
        attained the age of 62 or older; and
            (5) the term ``State'' means each of the 50 States, the 
        District of Columbia, and the unincorporated territories of 
        Puerto Rico and the U.S. Virgin Islands.
    (b) Grant Program.--The Attorney General of the United States (in 
this section referred to as the ``Attorney General'')--
            (1) shall establish a program in accordance with this 
        section to provide grants to States--
                    (A) to investigate and prosecute misleading and 
                fraudulent marketing practices; or
                    (B) to develop educational materials and training 
                aimed at reducing misleading and fraudulent marketing 
                of financial products toward seniors; and
            (2) may establish such performance objectives, reporting 
        requirements, and application procedures for States and State 
        agencies receiving grants under this section as the Attorney 
        General determines are necessary to carry out and assess the 
        effectiveness of the program under this section.
    (c) Use of Grant Amounts.--A grant under this section may be used 
(including through subgrants) by the State or the appropriate State 
agency designated by the State--
            (1) to fund additional staff to identify, investigate, and 
        prosecute cases involving misleading or fraudulent marketing of 
        financial products to seniors;
            (2) to fund technology, equipment, and training for 
        regulators, prosecutors, and law enforcement in order to 
        identify salespersons and advisers who target seniors through 
        the use of misleading designations;
            (3) to fund technology, equipment, and training for 
        prosecutors to increase the successful prosecution of those 
        targeting seniors with the use of misleading designations;
            (4) to provide educational materials and training to 
        regulators on the appropriateness of the use of designations by 
        salespersons and advisers of financial products;
            (5) to provide educational materials and training to 
        seniors to increase their awareness and understanding of 
        designations;
            (6) to develop comprehensive plans to combat misleading or 
        fraudulent marketing of financial products to seniors; and
            (7) to enhance provisions of State law that could offer 
        additional protection for seniors against misleading or 
        fraudulent marketing of financial products.
    (d) Grant Requirements.--
            (1) Maximum.--The amount of a grant under this section may 
        not exceed $500,000 per fiscal year per State, if all 
        requirements of paragraphs (2), (3), (4), and (5) are met. Such 
        amount shall be limited to $100,000 per fiscal year per State 
        in any case in which the State meets the requirements of--
                    (A) paragraphs (2) and (3), but not each of 
                paragraphs (4) and (5); or
                    (B) paragraphs (4) and (5), but not each of 
                paragraphs (2) and (3).
            (2) Standard designation rules for securities.--A State 
        shall have adopted rules on the appropriate use of designations 
        in the offer or sale of securities or investment advice, which 
        shall, to the extent practicable, conform to the minimum 
        requirements of the NASAA Model Rule on the Use of Senior-
        Specific Certifications and Professional Designations, as in 
        effect on the date of enactment of this Act, or any successor 
        thereto, as determined by the Attorney General.
            (3) Suitability rules for securities.--A State shall have 
        adopted standard rules on the suitability requirements in the 
        sale of securities, which shall, to the extent practicable, 
        conform to the minimum requirements on suitability imposed by 
        self-regulatory organization rules under the securities laws 
        (as defined in section 3 of the Securities Exchange Act of 
        1934), as determined by the Attorney General.
            (4) Standard designation rules for insurance products.--
                    (A) In general.--A State shall have adopted 
                standard rules on the appropriate use of designations 
                in the sale of insurance products, which shall, to the 
                extent practicable, conform to the minimum requirements 
                of the NASAA Model Rule on the Use of Senior-Specific 
                Certifications and Professional Designations, as in 
                effect on the date of enactment of this Act, or any 
                successor thereto, as determined by the Attorney 
                General.
                    (B) Sense of congress.--It is the sense of the 
                Congress that the National Association of Insurance 
                Commissioners (in this section referred to as the 
                ``NAIC'') should work in conjunction with NASAA in 
                establishing a single set of regulations regarding the 
                use of certifications and designations with which all 
                insurance agents and financial advisers should comply.
            (5) Suitability rules for insurance products.--A State 
        shall have adopted suitability standards for the sale of 
        annuity products, under which, at a minimum (as determined by 
        the Attorney General)--
                    (A) insurers shall be responsible and liable for 
                ensuring that sales of their annuity products meet 
                their suitability requirements;
                    (B) insurers shall have an obligation to ensure 
                that the prospective senior purchaser has sufficient 
                information for making an informed decision about a 
                purchase of an annuity product;
                    (C) the prospective senior purchaser shall be 
                informed of the total fees, costs, and commissions 
                associated with establishing the annuity transaction, 
                as well as the total fees, costs, commissions, and 
                penalties associated with the termination of the 
                transaction or agreement; and
                    (D) insurers and their agents are prohibited from 
                recommending the sale of an annuity product to a 
                senior, if the agent fails to obtain sufficient 
                information in order to satisfy the insurer and the 
                agent that the transaction is suitable for the senior.
    (e) Application.--To be eligible for a grant under this section, 
the State or appropriate State agency shall submit to the Attorney 
General a proposal to use the grant money to protect seniors from 
misleading or fraudulent marketing techniques in the offer and sale of 
financial products, which application shall--
            (1) identify the scope of the problem;
            (2) describe how the proposed program will help to protect 
        seniors from misleading or fraudulent marketing in the sale of 
        financial products, including, at a minimum--
                    (A) by proactively identifying senior victims of 
                misleading and fraudulent marketing in the offer and 
                sale of financial products;
                    (B) how the proposed program can assist in the 
                investigation and prosecution of those using misleading 
                or fraudulent marketing in the offer and sale of 
                financial products to seniors; and
                    (C) how the proposed program can help discourage 
                and reduce future cases of misleading or fraudulent 
                marketing in the offer and sale of financial products 
                to seniors; and
            (3) describe how the proposed program is to be integrated 
        with other existing State efforts.
    (f) Length of Participation.--A State receiving a grant under this 
section shall be provided assistance funds for a period of 3 years, 
after which the State may reapply for additional funding.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $8,000,000 for each of the 
fiscal years 2009 through 2013.
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