1.This Act may be cited as the
Senior Investment Protection Act of
2009
.
2.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.
3.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.
4.Grants to States
for enhanced protection of seniors from being misled by false
designations
(a)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)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)
(1)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 securitiesA 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 securitiesA 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 productsA 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)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
criteriaThe 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.
5.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.
6.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.
7.Authorization of
appropriationsThere are
authorized to be appropriated to carry out this Act, $8,000,000 for each of the
fiscal years 2010 through 2014.