[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 906 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 906
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 28, 2009
Mr. Kohl (for himself and Mrs. McCaskill) 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 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
MISLEAD 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 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, 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
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 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.
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.
<all>