The House passed late Thursday by a 414-2 vote the Financial Exploitation Prevention Act, legislation that would allow advisors and firms to delay suspicious transactions if they believe financial exploitation has occurred or is about to take place.
"We commend the House for passing this important investor protection legislation," Dale Brown, president of the Financial Services Institute, said Thursday in a statement. "Financial advisors are often on the front lines of detecting suspicious activity and helping protect clients from fraud and exploitation. This bill would equip firms and advisors with tools to better help protect vulnerable investors, while ensuring appropriate safeguards are in place. We urge the Senate to follow suit and quickly pass this legislation."
The temporary delay "can allow time to review suspicious activity, notify appropriate parties and help protect investors from potentially devastating financial harm," Brown said.
The bill, sponsored by Reps. Ann Wagner, R-Mo., and Josh Gottheimer, D-N.J., would also enable "mutual funds and their transfer agents to better protect seniors by delaying the redemption of securities if there is reasonable belief that financial exploitation has occurred," Eric Pan, president and CEO of the Investment Company Institute, added in another statement.
Far too often, senior citizens "are directly targeted for financial fraud," Wagner said in a statement. "The consequences of this crime extend to millions of Americans, with one out of every five senior investors falling victim to financial fraud and exploitation. This problem is only getting worse, so I got to work with my colleagues on both sides of the aisle to craft simple protections for seniors who need it most."
The bill "gives financial institutions critical tools to step in when they suspect a vulnerable adult is being exploited and gives law enforcement time to act before someone's hard-earned retirement is permanently stolen by fraudsters," Wagner said.
"One in five Americans over the age of 65 has been a victim of financial exploitation, experiencing estimated losses of $2.9 billion," Pan said.
The measure, according to the Insured Retirement Institute, "fills a critical gap in the current fraud prevention framework by empowering financial professionals to pause suspicious transactions before irreversible harm occurs to consumers, allowing relevant authorities the opportunity to assess the situation and investigate suspected exploitation."
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