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 shallmeet 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.