Financial Exploitation Prevention Act of 2025
- Bill Number
- H.R. 2478
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Passed House
- Latest Action
- 2026-06-25: Motion to reconsider laid on the table Agreed to without objection.
- Last Updated
- 2026-07-01T03:53:27Z
AI-Generated Summary
Purpose This legislation amends the Investment Company Act of 1940 to help prevent financial exploitation of certain adult investors by allowing registered open-end investment companies (mutual funds) and their transfer agents to temporarily delay redemption payments on securities in non-institutional direct-at-fund accounts when exploitation is suspected.
Key Provisions
- Election and Contact Information: Companies and transfer agents may elect to follow the new rules by notifying the Securities and Exchange Commission (SEC). They must request and document the name and contact details of at least one adult who can be reached about the account, and disclose in writing that this person may be contacted for exploitation concerns, health status, or to identify guardians or representatives.
- Redemption Delay Authority: If a company or agent reasonably believes a redemption request comes from a "specified adult" and involves financial exploitation, they may postpone payment beyond the standard seven days.
- Initial delay: Up to 15 business days.
- Extension: Up to 10 additional business days if internal review begins, the designated contact is notified (with exceptions), funds are held in a demand deposit account, and records are kept.
- Further extension: Possible by state regulators, agencies, or courts.
- Procedures and Safeguards: Companies must create internal rules for identifying exploitation, deciding on delayed funds, and employee authority. They must notify contacts in writing where required, retain detailed records, and include prospectus disclosures about possible delays.
- Definition of Specified Adult: Individuals age 65 or older, or those age 18 or older whom the company reasonably believes have a mental or physical impairment preventing self-protection.
- Reporting Requirement: The SEC must consult with other agencies and submit recommendations to Congress within one year on further regulatory or legislative steps.
Significant Changes to Existing Law The bill adds new subsections (h) and (i) to Section 22 of the Investment Company Act of 1940. These create an optional framework for delaying redemptions in exploitation cases, overriding the existing seven-day limit in subsection (e) under specific conditions. It also introduces mandatory record-keeping, notification, and procedural requirements not previously in the statute.
Potential Impacts
- On Government Agencies: The SEC gains authority to receive election notices and access records; it must produce a report involving coordination with the Commodity Futures Trading Commission, Bureau of Consumer Financial Protection, and banking regulators. State regulators and courts may extend delays.
- On Citizens: Specified adults and their designated contacts gain protections against suspected exploitation, but redemptions may be delayed; companies must handle direct-at-fund accounts differently.
- On International Relations: No direct effects identified in the legislation.
Main Stakeholders Affected
- Registered open-end investment companies and transfer agents (who may elect compliance and must follow procedures if they do).
- Specified adults holding non-institutional direct-at-fund accounts.
- Designated contact individuals named by account holders.
- Federal regulators (primarily the SEC) and state regulators or courts.
Notable Legal, Constitutional, or Political Implications The measure creates a regulated exception to standard redemption timelines, potentially affecting property rights in securities while aiming to protect vulnerable investors. It includes privacy and notification safeguards but allows exceptions if contacts are suspected of exploitation. The bill requires internal reviews and record retention, which could lead to administrative oversight by the SEC.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (11)
Rep. Gottheimer, Josh [D-NJ-5], Rep. Garbarino, Andrew R. [R-NY-2], Rep. Steil, Bryan [R-WI-1], Rep. Kim, Young [R-CA-40], Rep. Perez, Marie Gluesenkamp [D-WA-3], Rep. Lawler, Michael [R-NY-17], Rep. Huizenga, Bill [R-MI-4], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Fields, Cleo [D-LA-6], Rep. Sessions, Pete [R-TX-17], Rep. Nunn, Zachary [R-IA-3]
Recent Actions
- 2026-06-25: Motion to reconsider laid on the table Agreed to without objection.
- 2026-06-25: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 414 - 2 (Roll no. 227). (Roll call 227)
- 2026-06-25: Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 414 - 2 (Roll no. 227). (Roll call 227)
- 2026-06-25: Considered as unfinished business. (consideration: CR H4251-4252)
- 2026-06-24: At the conclusion of debate, the chair put the question on the motion to suspend the rules. Mr. Hill (AR) objected to the vote on the grounds that a quorum was not present. Further proceedings on the motion were postponed. The point of no quorum was considered as withdrawn.
- 2026-06-24: DEBATE - The House proceeded with forty minutes of debate on H.R. 2478.
- 2026-06-24: Considered under suspension of the rules. (consideration: CR H4222-4226; text: CR H4222-4223)
- 2026-06-24: Mr. Hill (AR) moved to suspend the rules and pass the bill, as amended.
- 2025-11-04: Placed on the Union Calendar, Calendar No. 313.
- 2025-11-04: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-361.
- 2025-11-04: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-361.
- 2025-09-16: Ordered to be Reported (Amended) by the Yeas and Nays: 50 - 0.
- 2025-09-16: Committee Consideration and Mark-up Session Held
- 2025-03-27: Referred to the House Committee on Financial Services.
- 2025-03-27: Introduced in House
Bill Versions
- Financial Exploitation Prevention Act of 2025 — issued 2026-06-25 — PDF (12 pages)
- Financial Exploitation Prevention Act of 2025 — issued 2025-03-27 — PDF (11 pages)
- Financial Exploitation Prevention Act of 2025 — issued 2025-11-04 — PDF (14 pages)