[House Report 119-361]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-361
======================================================================
FINANCIAL EXPLOITATION PREVENTION ACT OF 2025
_______
November 4, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 2478]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2478) to amend the Investment Company Act of
1940 to postpone the date of payment or satisfaction upon
redemption of certain securities in the case of the financial
exploitation of specified adults, and for other purposes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 4
Background and Need for Legislation.............................. 4
Committee Consideration.......................................... 5
Related Hearings................................................. 5
Committee Votes.................................................. 6
Committee Oversight Findings..................................... 8
Performance Goals and Objectives................................. 8
Committee Cost Estimate.......................................... 8
New Budget Authority and CBO Cost Estimate....................... 8
Unfunded Mandates Statement...................................... 8
Earmark Statement................................................ 8
Federal Advisory Committee Act Statement......................... 9
Applicability to the Legislative Branch.......................... 9
Duplication of Federal Programs.................................. 9
Section-by-Section Analysis of the Legislation................... 9
Changes in Existing Law Made by the Bill, as Reported............ 9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Exploitation Prevention Act
of 2025''.
SEC. 2. REDEMPTION OF CERTAIN SECURITIES POSTPONED.
(a) In General.--Section 22 of the Investment Company Act of 1940 (15
U.S.C. 80a-22) is amended by adding at the end the following:
``(h) Requirements With Respect to Non-institutional Direct At-fund
Accounts.--
``(1) Election.--
``(A) In general.--A registered open-end investment
company and a transfer agent described under paragraph
(2) may elect to comply with the requirements under
paragraph (2) and subsection (i) by notifying the
Commission of such election.
``(B) Effect of election.--Paragraph (2) and
subsection (i) shall only apply to a registered open-
end investment company and a transfer agent that have
made the election under subparagraph (A).
``(2) Requirements.--In the case of a customer who is a
holder of a non-institutional account held directly with a
registered open-end investment company and serviced by a
transfer agent (a `direct-at-fund account'), the company and
transfer agent shall--
``(A) request from such customer the name and contact
information of at least one individual who--
``(i) is at the time of such request an
adult; and
``(ii) may be contacted with respect to such
account;
``(B) document and retain the information received
pursuant to subparagraph (A); and
``(C) disclose to such customer in writing (including
through electronic delivery) that such company or
transfer agent may contact an individual specified
pursuant to subparagraph (A) with respect to the
account of such customer to--
``(i) address possible financial exploitation
of such customer;
``(ii) confirm the contact information or
health status of the customer; or
``(iii) identify any legal guardian,
executor, trustee, or holder of a power of
attorney of the customer.
``(i) Redemption of Certain Securities Postponed.--
``(1) In general.--Notwithstanding subsection (e), a
registered open-end investment company or a transfer agent
acting on behalf of such company may postpone the date of
payment or satisfaction upon redemption of any redeemable
security in accordance with its terms for more than seven days
after the tender of such security to such company or its agent
designated for that purpose for redemption if such company or
agent reasonably believes that--
``(A) the redemption is requested by a security
holder who is a specified adult; and
``(B) financial exploitation has occurred, is
occurring, or has been attempted with respect to such
redemption.
``(2) Duration.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), a registered open-end
investment company or a transfer agent acting on behalf
of such company may postpone the date of payment or
satisfaction upon redemption of a redeemable security
under paragraph (1) for a period of not more than 15
business days.
``(B) Extension upon determination of exploitation.--
The period described in subparagraph (A) may be
extended by an additional 10 business days if the
registered open-end investment company or a transfer
agent acting on behalf of such company--
``(i) reasonably believes that--
``(I) the redemption is requested by
a security holder who is a specified
adult; and
``(II) financial exploitation has
occurred, is occurring, or has been
attempted with respect to such
redemption;
``(ii) subject to subparagraph (D), not later
than 2 days after making a determination under
clause (i), notifies the individuals specified
by such security holder under subsection
(h)(2)(A) in writing (including through
electronic delivery) of the extension of the
period described in subparagraph (A) under this
subparagraph and the reason for such extension;
``(iii) initiates an internal review of the
facts and circumstances relating to the
determination under clause (i);
``(iv) holds amounts related to the delayed
payment or satisfaction upon redemption of the
redeemable security in a demand deposit
account; and
``(v) documents and retains records related
to carrying out clause (iv) and includes such
records in the first required account statement
of the security holder provided after the date
on which the determination is made under clause
(i).
``(C) Extension by government.--A State regulator,
administrative agency of competent jurisdiction, or
court of competent jurisdiction may extend the period
described in subparagraph (A).
``(D) Notification.--
``(i) Exception.--Subparagraph (B)(ii) shall
not apply if a registered open-end investment
company or transfer agent acting on behalf of
such company reasonably believes that an
individual required to be notified under such
subparagraph is, has been, or will subject the
security holder who identified such individual
under subsection (h)(2)(A) to financial
exploitation.
``(ii) Reasonable efforts.--An open-end
investment company or transfer agent acting on
behalf of such company shall be considered in
compliance with subparagraph (B)(ii) if such
company or transfer agent makes a reasonable
effort to contact the individuals specified by
a security holder under subsection (h)(2)(A).
``(E) Internal procedures.--An open-end investment
company or transfer agent acting on behalf of such
company shall establish procedures to carry out the
requirements under this subsection, including
procedures--
``(i) related to the identification and
reporting of matters related to the financial
exploitation of specified adults;
``(ii) to determine whether to release or
reinvest delayed redemption proceeds, taking
into account the facts and circumstances of
each case, should the internal review under
subparagraph (B)(iii) support the reasonable
belief described in subparagraph (B)(i);
``(iii) identifying each employee of the
company or transfer agent with authority to
establish, extend, or terminate a period
described in paragraph (1) or subparagraph (A);
``(iv) in the case of a transfer agent, that
are reasonably designed to ensure that the
employees of such transfer agent comply with
this subsection; and
``(v) in the case of an open-end investment
company, establishing periodic reporting
requirements under which a transfer agent
acting on behalf of such company shall notify
such company of--
``(I) each extension under
subparagraph (B) authorized by such
transfer agent;
``(II) each finding by the transfer
agent under subparagraph (B)(i);
``(III) each notification under
subparagraph (B)(ii) carried out by
such transfer agent; and
``(IV) the results of each internal
review initiated by the transfer agent
under subparagraph (B)(iii).
``(F) Information included in certain statements.--An
open-end investment company shall include in each
prospectus or statement of additional information a
notification that the company or transfer agent acting
on behalf of such company may postpone redemption of
certain securities under this subsection.
``(G) Record retention.--An open-end investment
company or transfer agent acting on behalf of such
company shall--
``(i) document and retain records of--
``(I) each postponement of redemption
under subparagraph (A), (B), or (C);
``(II) each finding under
subparagraph (B)(i);
``(III) the name and position of each
employee described in subparagraph
(E)(iii);
``(IV) each notification carried out
under subparagraph (B)(ii); and
``(V) the results of each internal
review initiated under subparagraph
(B)(iii); and
``(ii) make such records available to the
Commission at the request of the Commission.
``(3) Specified adult defined.--In this subsection, the term
`specified adult' means--
``(A) an individual age 65 or older; or
``(B) an individual age 18 or older who a registered
open-end investment company or a transfer agent acting
on behalf of such company reasonably believes has a
mental or physical impairment that renders the
individual unable to protect the individual's own
interests.''.
(b) Regulatory and Legislative Recommendations.--
(1) In general.--Not later than 1 year after the date of the
enactment of this section, the Securities and Exchange
Commission, in consultation with the entities specified in
paragraph (2), shall submit to Congress a report that includes
recommendations regarding the regulatory and legislative
changes necessary to address the financial exploitation of
security holders who are specified adults (as defined in
subsection (i)(3) of section 22 of the Investment Company Act
of 1940 (15 U.S.C. 80a-22), as added by this section).
(2) Consultation.--The entities specified in this paragraph
are as follows:
(A) The Commodity Futures Trading Commission.
(B) The Director of the Bureau of Consumer Financial
Protection.
(C) The Financial Industry Regulatory Authority.
(D) The North American Securities Administrators
Association.
(E) The Board of Governors of the Federal Reserve
System.
(F) The Comptroller of the Currency.
(G) The Federal Deposit Insurance Corporation.
Purpose and Summary
H.R. 2478, the Financial Exploitation Prevention Act of
2025, was introduced on March 27, 2025, by Republican
Representative Ann Wagner (MO-02). H.R. 2478 amends the
Investment Company Act of 1940 to postpone the date of payment
or satisfaction upon redemption of certain securities in the
case of the financial exploitation of specified adults. The
bill allows registered open-end investment companies and their
transfer agents to implement safeguards that can delay the
redemption of securities if they reasonably believe financial
exploitation is occurring or has been attempted.
Background and Need for Legislation
Financial exploitation is a growing problem for America's
aging population, with the American Association of Retired
Persons estimating that financial exploitation costs seniors
over $28 billion annually.\1\ Federal law defines this crime as
the theft of an older or disabled person's assets by someone in
a position of trust or by a targeted individual. The
perpetrator often uses deceit, false pretenses, coercion, or
threats to take the victim's money.
---------------------------------------------------------------------------
\1\Jilenne Gunther, The Scope of Elder Financial Exploitation: What
It Costs Victims, AARP Public Policy Institute (June 27, 2023), https:/
/doi.org/10.26419/ppi.00194.001.
---------------------------------------------------------------------------
H.R. 2478 gives the financial industry better tools to
address suspected financial exploitation and abuse of seniors
and those with mental and physical disabilities. The bill
permits an open-end investment company to temporarily delay a
security redemption if it reasonably suspects the transaction
is related to the financial exploitation of a senior (age 65+)
or a vulnerable adult (age 18+). The company can initially halt
the redemption for up to 15 days, with an option to extend the
delay for another 10 days if exploitation is confirmed. During
this period, the funds must be held in a demand deposit
account. Furthermore, the legislation requires the Securities
and Exchange Commission (SEC) to provide Congress with
recommendations for addressing the financial exploitation of
these individuals.
Committee Consideration
119TH CONGRESS
On March 27, 2025, Representative Wagner introduced H.R.
2478, the Financial Exploitation Prevention Act of 2025, with
Representatives Josh Gottheimer (D-NJ), Andrew Garbarino (R-
NY), Bryan Steil (R-WI), Young Kim (R-CA), Marie Gluesenkamp
Perez (D-WA), and Mike Lawler (R-NY), as original cosponsors.
Representatives Bill Huizenga (R-MI), Eugene Vindman (D-VA),
Cleo Fields (D-LA), Pete Sessions (R-TX), and Zach Nunn (R-IA)
were added subsequently as cosponsors. The bill was referred
solely to the Committee on Financial Services.
The bill was attached to the July 15, 2025, hearing titled
``Dodd-Frank Turns 15: Lessons Learned and the Road Ahead.''
On September 16, 2025, the Committee on Financial Services
met in open session to consider, among others, H.R. 2478. The
Committee ordered H.R. 2478, as amended, to be favorably
reported to the House of Representatives.
118TH CONGRESS
On January 25, 2023, Representative Wagner introduced H.R.
500, the Financial Exploitation Prevention Act of 2023, with
Representatives Gottheimer, Steil, Huizenga, and Al Green (D-
TX) as original cosponsors. Representatives Erin Houchin (R-
IN), Byron Donalds (R-FL), John Rose (R-TN), Nikema Williams
(D-GA), John James (R-MI), Lawler, Gluesenkamp Perez, Kim, and
Garbarino were added subsequently as cosponsors. This bill is
an earlier version of H.R. 2478. The bill was referred solely
to the Committee on Financial Services. On January 30, 2023,
the House suspended the rules and passed the bill by a vote of
419 yeas and 0 nays. It was received in the Senate and referred
to the Committee on Banking, Housing, and Urban Affairs. In
addition, Senator Bill Hagerty (R-TN) introduced S. 1481, a
companion bill to H.R. 500. There was no further action on H.R.
500 in the 118th Congress.
117TH CONGRESS
On March 26, 2021, Representative Wagner introduced H.R.
2265, the Financial Exploitation Prevention Act of 2021.
Representatives Ed Perlmutter (D-CO), Antonio Delgado (D-NY),
Susie Lee (D-NV), Steil, Huizenga, Green, Gottheimer, and
Williams were added subsequently as cosponsors. This bill is an
earlier version of H.R. 2478. The bill was referred solely to
the Committee on Financial Services. On July 29, 2021, the
Committee ordered H.R. 2265 to be favorably reported to the
House of Representatives by voice vote. On October 25, 2021,
the House suspended the rules and passed the bill by voice
vote. It was received in the Senate and referred to the
Committee on Banking, Housing, and Urban Affairs. There was no
further action on H.R. 2265 in the 117th Congress.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 2478:
The Committee on Financial Services held a July 15, 2025,
hearing titled ``Dodd-Frank Turns 15: Lessons Learned and the
Road Ahead.'' A discussion draft version of the bill was
attached to the hearing. The following witnesses testified: The
Honorable Ken Bentsen, President and Chief Executive Officer,
Securities Industry and Financial Markets Association; Mrs.
Lindsey Johnson, President and Chief Executive Officer,
Consumer Bankers Association; Mr. Tom Quaadman, Chief of
Government Affairs and Public Policy, Investment Company
Institute; Dr. Paul Kupiec, Senior Fellow, American Enterprise
Institute; and Mr. Dennis Kelleher, Co-Founder, President, and
Chief Executive Officer, Better Markets.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On September 16, 2025, the Committee ordered H.R. 2478, as
amended, to be reported favorably to the House by a recorded
vote of 50 yeas and 0 nays, a quorum being present. (Record
Vote No. FC-195).
Before the question to report was called, Representative
Wagner offered an amendment in the nature of a substitute,
desig-
nated WAGNER_029, which made minor edits and technical changes.
The amendment was adopted by voice vote.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 2478 is to allow
registered open-end investment companies and their transfer
agents to delay the redemption of securities if they reasonably
believe financial exploitation has been attempted.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 2478. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Financial
Exploitation Prevention Act of 2025''.
Section 2. Redemption of certain securities postponed
Section 2 amends Section 22 of the Investment Company Act
of 1940 to postpone the date of payment or satisfaction upon
redemption of certain securities in the case of the financial
exploitation of specified adults. The bill allows registered
open-end investment companies and their transfer agents to
voluntarily elect to implement safeguards that can delay the
redemption of securities if they reasonably believe financial
exploitation of a senior (age 65+) or a vulnerable adult (age
18+) is occurring or has been attempted. The Securities and
Exchange Commission is required to submit to Congress a report
that includes recommendations regarding the regulatory and
legislative changes necessary to address the financial
exploitation of security holders who are specified adults.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
INVESTMENT COMPANY ACT OF 1940
TITLE I--INVESTMENT COMPANIES
* * * * * * *
distribution, redemption, and repurchase of redeemable securities
Sec. 22. (a) A securities association registered under
section 15A of the Securities Exchange Act of 1934 may
prescribe, by rules adopted and in effect in accordance with
said section and subject to all provisions of said section
applicable to the rules of such an association--
(1) a method or methods for computing the minimum
price at which a member thereof may purchase from any
investment company, any redeemable security issued by
such company and the maximum price at which a member
may sell to such company any redeemable security issued
by it or which he may receive for such security upon
redemption, so that the price in each case will bear
such relation to the current net asset value of such
security computed as of such time as the rules may
prescribe; and
(2) a minimum period of time which must elapse after
the sale or issue of such security before any resale to
such company by a member or its redemption upon
surrender by a member;
in each case for the purpose of eliminating or reducing so far
as reasonably practicable any dilution of the value of other
outstanding securities of such company or any other result of
such purchase, redemption, or sale which is unfair to holders
of such other outstanding securities; and said rules may
prohibit the members of the association from purchasing,
selling, or surrendering for redemption any such redeemable
securities in contravention of said rules.
(b)(1) Such a securities association may also, by rules
adopted and in effect in accordance with said section 15A, and
notwithstanding the provisions of subsection (b)(6) thereof but
subject to all other provisions of said section applicable to
the rules of such an association, prohibit its members from
purchasing, in connection with a primary distribution of
redeemable securities of which any registered investment
company is the issuer, any such security from the issuer or
from any principal underwriter except at a price equal to the
price at which such security is then offered to the public less
a commission, discount, or spread which is computed in
conformity with a method or methods, and within such
limitations as to the relation thereof to said public offering
price, as such rules may prescribe in order that the price at
which such security is offered or sold to the public shall not
include an excessive sales load but shall allow for reasonable
compensation for sales personnel, broker-dealers, and
underwriters, and for reasonable sales loads to investors. The
Commission shall on application or otherwise, if it appears
that smaller companies are subject to relatively higher
operating costs, make due allowance therefor by granting any
such company or class of companies appropriate qualified
exemptions from the provisions of this section.
(2) At any time after the expiration of eighteen months from
the date of enactment of the Investment Company Amendments Act
of 1970 (or, if earlier, after a securities association has
adopted for purposes of paragraph (1) any rule respecting
excessive sales loads), the Commission may alter or supplement
the rules of any securities association as may be necessary to
effectuate the purposes of this subsection in the manner
provided by section 19(c) of the Securities Exchange Act of
1934.
(3) If any provision of this subsection is in conflict with
any provision of any law of the United States in effect on the
date this subsection takes effect, the provisions of this
subsection shall prevail.
(c) The Commission may make rules and regulations applicable
to registered investment companies and to principal
underwriters of, and dealers in, the redeemable securities of
any registered investment company, whether or not members of
any securities association, to the same extent, covering the
same subject matter, and for the accomplishment of the same
ends as are prescribed in subsection (a) of this section in
respect of the rules which may be made by a registered
securities association governing its members. Any rules and
regulations so made by the Commission, to the extent that they
may be inconsistent with the rules of any such association,
shall so long as they remain in force supersede the rules of
the association and be binding upon its members as well as all
other underwriters and dealers to whom they may be applicable.
(d) No registered investment company shall sell any
redeemable security issued by it to any person except either to
or through a principal underwriter for distribution or at a
current public offering price described in the prospectus, and,
if such class of security is being currently offered to the
public by or through an underwriter, no principal underwriter
of such security and no dealer shall sell any such security to
any person except a dealer, a principal underwriter, or the
issuer, except at a current public offering price described in
the prospectus. Nothing in this subsection shall prevent a sale
made (i) pursuant to an offer of exchange permitted by section
11 including any offer made pursuant to section 11(b); (ii)
pursuant to an offer made solely to all registered holders of
the securities, or of a particular class or series of
securities issued by the company proportionate to their
holdings or proportionate to any cash distribution made to them
by the company (subject to appropriate qualifications designed
solely to avoid issuance of fractional securities); or (iii) in
accordance with rules and regulations of the Commission made
pursuant to subsection (b) of section 12.
(e) No registered investment company shall suspend the right
of redemption, or postpone the date of payment or satisfaction
upon redemption of any redeemable security in accordance with
its terms for more than seven days after the tender of such
security to the company or its agent designated for that
purpose for redemption, except--
(1) for any period (A) during which the New York
Stock Exchange is closed other than customary week-end
and holiday closings or (B) during which trading on the
New York Stock Exchange is restricted;
(2) for any period during which an emergency exists
as a result of which (A) disposal by the company of
securities owned by it is not reasonably practicable or
(B) it is not reasonably practicable for such company
fairly to determine the value of its net assets; or
(3) for such other periods as the Commission may by
order permit for the protection of security holders of
the company.
The Commission shall by rules and regulations determine the
conditions under which (i) trading shall be deemed to be
restricted and (ii) an emergency shall be deemed to exist
within the meaning of this subsection.
(f) No registered open-end company shall restrict the
transferability or negotiability of any security of which it is
the issuer except in conformity with the statements with
respect thereto contained in its registration statement nor in
contravention of such rules and regulations as the Commission
may prescribe in the interests of the holders of all of the
outstanding securities of such investment company.
(g) No registered open-end company shall issue any of its
securities (1) for services; or (2) for property other than
cash or securities (including securities of which such
registered company is the issuer), except as a dividend or
distribution to its security holders or in connection with a
reorganization.
(h) Requirements With Respect to Non-institutional Direct At-
fund Accounts.--
(1) Election.--
(A) In general.--A registered open-end
investment company and a transfer agent
described under paragraph (2) may elect to
comply with the requirements under paragraph
(2) and subsection (i) by notifying the
Commission of such election.
(B) Effect of election.--Paragraph (2) and
subsection (i) shall only apply to a registered
open-end investment company and a transfer
agent that have made the election under
subparagraph (A).
(2) Requirements.--In the case of a customer who is a
holder of a non-institutional account held directly
with a registered open-end investment company and
serviced by a transfer agent (a ``direct-at-fund
account''), the company and transfer agent shall--
(A) request from such customer the name and
contact information of at least one individual
who--
(i) is at the time of such request an
adult; and
(ii) may be contacted with respect to
such account;
(B) document and retain the information
received pursuant to subparagraph (A); and
(C) disclose to such customer in writing
(including through electronic delivery) that
such company or transfer agent may contact an
individual specified pursuant to subparagraph
(A) with respect to the account of such
customer to--
(i) address possible financial
exploitation of such customer;
(ii) confirm the contact information
or health status of the customer; or
(iii) identify any legal guardian,
executor, trustee, or holder of a power
of attorney of the customer.
(i) Redemption of Certain Securities Postponed.--
(1) In general.--Notwithstanding subsection (e), a
registered open-end investment company or a transfer
agent acting on behalf of such company may postpone the
date of payment or satisfaction upon redemption of any
redeemable security in accordance with its terms for
more than seven days after the tender of such security
to such company or its agent designated for that
purpose for redemption if such company or agent
reasonably believes that--
(A) the redemption is requested by a security
holder who is a specified adult; and
(B) financial exploitation has occurred, is
occurring, or has been attempted with respect
to such redemption.
(2) Duration.--
(A) In general.--Except as provided in
subparagraphs (B) and (C), a registered open-
end investment company or a transfer agent
acting on behalf of such company may postpone
the date of payment or satisfaction upon
redemption of a redeemable security under
paragraph (1) for a period of not more than 15
business days.
(B) Extension upon determination of
exploitation.--The period described in
subparagraph (A) may be extended by an
additional 10 business days if the registered
open-end investment company or a transfer agent
acting on behalf of such company--
(i) reasonably believes that--
(I) the redemption is
requested by a security holder
who is a specified adult; and
(II) financial exploitation
has occurred, is occurring, or
has been attempted with respect
to such redemption;
(ii) subject to subparagraph (D), not
later than 2 days after making a
determination under clause (i),
notifies the individuals specified by
such security holder under subsection
(h)(2)(A) in writing (including through
electronic delivery) of the extension
of the period described in subparagraph
(A) under this subparagraph and the
reason for such extension;
(iii) initiates an internal review of
the facts and circumstances relating to
the determination under clause (i);
(iv) holds amounts related to the
delayed payment or satisfaction upon
redemption of the redeemable security
in a demand deposit account; and
(v) documents and retains records
related to carrying out clause (iv) and
includes such records in the first
required account statement of the
security holder provided after the date
on which the determination is made
under clause (i).
(C) Extension by government.--A State
regulator, administrative agency of competent
jurisdiction, or court of competent
jurisdiction may extend the period described in
subparagraph (A).
(D) Notification.--
(i) Exception.--Subparagraph (B)(ii)
shall not apply if a registered open-
end investment company or transfer
agent acting on behalf of such company
reasonably believes that an individual
required to be notified under such
subparagraph is, has been, or will
subject the security holder who
identified such individual under
subsection (h)(2)(A) to financial
exploitation.
(ii) Reasonable efforts.--An open-end
investment company or transfer agent
acting on behalf of such company shall
be considered in compliance with
subparagraph (B)(ii) if such company or
transfer agent makes a reasonable
effort to contact the individuals
specified by a security holder under
subsection (h)(2)(A).
(E) Internal procedures.--An open-end
investment company or transfer agent acting on
behalf of such company shall establish
procedures to carry out the requirements under
this subsection, including procedures--
(i) related to the identification and
reporting of matters related to the
financial exploitation of specified
adults;
(ii) to determine whether to release
or reinvest delayed redemption
proceeds, taking into account the facts
and circumstances of each case, should
the internal review under subparagraph
(B)(iii) support the reasonable belief
described in subparagraph (B)(i);
(iii) identifying each employee of
the company or transfer agent with
authority to establish, extend, or
terminate a period described in
paragraph (1) or subparagraph (A);
(iv) in the case of a transfer agent,
that are reasonably designed to ensure
that the employees of such transfer
agent comply with this subsection; and
(v) in the case of an open-end
investment company, establishing
periodic reporting requirements under
which a transfer agent acting on behalf
of such company shall notify such
company of--
(I) each extension under
subparagraph (B) authorized by
such transfer agent;
(II) each finding by the
transfer agent under
subparagraph (B)(i);
(III) each notification under
subparagraph (B)(ii) carried
out by such transfer agent; and
(IV) the results of each
internal review initiated by
the transfer agent under
subparagraph (B)(iii).
(F) Information included in certain
statements.--An open-end investment company
shall include in each prospectus or statement
of additional information a notification that
the company or transfer agent acting on behalf
of such company may postpone redemption of
certain securities under this subsection.
(G) Record retention.--An open-end investment
company or transfer agent acting on behalf of
such company shall--
(i) document and retain records of--
(I) each postponement of
redemption under subparagraph
(A), (B), or (C);
(II) each finding under
subparagraph (B)(i);
(III) the name and position
of each employee described in
subparagraph (E)(iii);
(IV) each notification
carried out under subparagraph
(B)(ii); and
(V) the results of each
internal review initiated under
subparagraph (B)(iii); and
(ii) make such records available to
the Commission at the request of the
Commission.
(3) Specified adult defined.--In this subsection, the
term ``specified adult'' means--
(A) an individual age 65 or older; or
(B) an individual age 18 or older who a
registered open-end investment company or a
transfer agent acting on behalf of such company
reasonably believes has a mental or physical
impairment that renders the individual unable
to protect the individual's own interests.
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