# Financial Exploitation Prevention Act of 2023

This bill creates a new protection for older adults and vulnerable people who invest money through mutual funds. Specifically, it allows investment companies and the firms that handle their transactions to pause redemption requests—the process of withdrawing money from an investment—if they suspect financial exploitation is happening.

Here's how it works in practice: If you're 65 or older, or if you're an adult with a mental or physical condition that makes you vulnerable, the investment company can ask you to name a trusted contact person they can reach out to if something seems wrong with your account. When you try to withdraw your money, if the company suspects someone is pressuring you to make the withdrawal against your interests, they can hold onto your money for up to 15 business days while they investigate. If they find real evidence of exploitation, they can extend that hold for another 10 business days. During this time, they'll notify your trusted contact and keep your money in a regular bank account earning interest.

The bill requires investment companies to set up internal procedures for spotting and reporting suspected exploitation, and they have to keep detailed records of every time they delay a withdrawal. They must also tell customers upfront that this protection exists. The goal is to give families and authorities time to step in and protect vulnerable investors from scams, coercion, or other forms of financial abuse before their money disappears. The Securities and Exchange Commission also has to study the problem and recommend additional protections within a year.

Financial Exploitation Prevention Act of 2023

Wagner, Ann

Financial Exploitation Prevention Act of 2023 This bill addresses the redemption of securities involving the potential financial exploitation of an adult by allowing an open-end investment company to elect to comply with certain procedures. (Open-end investment management companies offer securities in pooled investment vehicles such as mutual funds.) Specifically, the bill allows for the delay of the redemption of a security issued by an open-end investment management company if the company reasonably believes the redemption involves the financial exploitation of an individual age 65 or older or an individual age 18 or older who is unable to protect his or her own interests. The company may initially delay the redemption for up to 15 days and, upon making a determination of exploitation, may delay the redemption an additional 10 days. In the event of delay, the company must hold the amounts related to the redemption in a demand deposit account. Additionally, the Securities and Exchange Commission must make legislative and regulatory recommendations to address the financial exploitation of these adults.