[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3551 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3551

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 10, 2009

   Mr. Hodes (for himself and Ms. Moore of Wisconsin) introduced the 
 following bill; which was referred to the Committee on the Judiciary, 
and in addition to the Committee on Financial Services, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 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 Investment Protection Act of 
2009''.

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. 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.

SEC. 4. GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS FROM BEING 
              MISLED BY FALSE DESIGNATIONS.

    (a) Grant Program.--The Attorney General of the United States (in 
this Act referred to as the ``Attorney General'')--
            (1) shall establish a program in accordance with this Act 
        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 Act as the Attorney 
        General determines are necessary to carry out and assess the 
        effectiveness of the program under this Act.
    (b) Use of Grant Amounts.--A grant under this Act 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 (through civil, administrative, or criminal 
        enforcement actions) 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.
    (c) Grant Requirements.--
            (1) Maximum.--The amount of a grant under this Act 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 meet or exceed 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 
        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 National Association of Insurance Commissioners Model 
        Regulation on the Use of Senior-Specific Certifications and 
        Professional Designations in the Sale of Life Insurance and 
        Annuities, as in effect on the date of enactment of this Act, 
        or any successor thereto, as determined by the Attorney 
        General.
            (5) Suitability and supervision rules for annuity 
        products.--
                    (A) In general.--A State shall have adopted rules 
                governing insurer supervision of, suitability of, and 
                insurer and insurance producer conduct relating to, the 
                sale of annuity products, including fixed and index 
                annuities.
                    (B) Annuity products criteria.--The rules required 
                by subparagraph (A) shall, to the extent practicable 
                (as determined by the Attorney General), provide--
                            (i) that insurers, and insurance producers 
                        are responsible for, and liable for penalties 
                        for, the suitability of each recommended 
                        annuity transaction;
                            (ii) that insurers and insurance producers 
                        are required to apply a standard for 
                        determining the suitability of each recommended 
                        annuity transaction, including fixed and index 
                        annuities, that is at least as protective of 
                        the interests of the consumer as rule 2821(b) 
                        of the Financial Industry Regulatory Authority 
                        (in this paragraph referred to as ``FINRA''), 
                        as in effect on the date of enactment of this 
                        Act, or any successor to such rule;
                            (iii) that insurers and insurance producers 
                        are required to maintain a process for review 
                        of the suitability, and approval or 
                        disapproval, of each recommended annuity 
                        transaction that is at least as protective of 
                        the interests of the consumer as the principal 
                        review required under rule 2821(c) of FINRA, as 
                        in effect on the date of enactment of this Act, 
                        or any successor to such rule;
                            (iv) that insurers and insurance producers 
                        are required to maintain processes for the 
                        supervision of direct annuity sales and 
                        insurance producer-recommended annuity sales 
                        (including procedures for the insurer to obtain 
                        and confirm consumer suitability information 
                        and for the insurer to confirm consumer 
                        understanding of the annuity transaction) that 
                        are at least as protective of the interests of 
                        the consumer as member broker and dealer 
                        supervision requirements of FINRA, as in effect 
                        on the date of enactment of this Act, or any 
                        successor to such requirements;
                            (v) that insurers are required to verify 
                        that each insurance producer successfully 
                        completes, and each insurance producer is 
                        required to receive, training designed to 
                        ensure that the insurance producer is competent 
                        to recommend each class of annuity;
                            (vi) that insurers are required to verify 
                        that insurance producers receive, and insurance 
                        producers are required to receive, training 
                        regarding the features of each offered annuity 
                        product, to an extent that is at least as 
                        protective of the interests of the consumer as 
                        the FINRA firm element training requirements, 
                        as in effect on the date of enactment of this 
                        Act, or any successor to such requirements;
                            (vii) for coordination of such rules with 
                        the rules of FINRA governing member brokers, 
                        dealers, and security representatives, to the 
                        extent appropriate, consistent with protecting 
                        the interests of consumers, for State insurance 
                        regulators to rely on, or to avoid duplication 
                        of FINRA rules; and
                            (viii) for exemption from such rules only 
                        if such exemption is consistent with the 
                        protection of consumers.

SEC. 5. APPLICATIONS.

    To be eligible for a grant under this Act, 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.

SEC. 6. LENGTH OF PARTICIPATION.

    A State receiving a grant under this Act shall be provided 
assistance funds for a period of 3 years, after which the State may 
reapply for additional funding.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this Act, 
$8,000,000 for each of the fiscal years 2010 through 2014.
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