The U.S. House of Representatives approved H.R. 2478, the Financial Exploitation Prevention Act of 2025, by a 414-2 vote last month. The bipartisan legislation, sponsored by Rep. Ann Wagner (R-Mo.) and Rep. Josh Gottheimer (D-N.J.), amends the Investment Company Act of 1940 to grant registered open-end investment companies and their transfer agents explicit authority to delay redemptions for up to 15 business days when they reasonably suspect financial exploitation of an investor aged 65 or older, or an adult with a physical or mental impairment limiting their ability to protect their interests.
If exploitation is confirmed, firms can extend the hold by an additional 10 business days, bringing the maximum delay without court involvement to 25 business days. Courts, state regulators, or other authorities may approve longer holds. Participating firms must notify the Securities and Exchange Commission and request a trusted contact from customers for use when exploitation is suspected. The bill also directs the SEC to report to Congress within one year on further regulatory and legislative options to reduce financial fraud against vulnerable adults.
The legislation addresses a gap in existing protections. Financial advisors currently navigate a patchwork of state-level safeguards and a FINRA rule allowing broker-dealers to place temporary holds on suspicious disbursements. However, mutual funds and transfer agents lacked similar standing authority. The bill extends comparable safeguards to the fund side of the industry, which had been without explicit federal permission to pause transactions.
Reported losses from elder fraud continue to climb. According to the FBI's Internet Crime Complaint Center, Americans aged 60 and older filed over 200,000 complaints in 2025, reporting combined losses of approximately $7.7 billion, with an average loss per victim of about $38,500. The Federal Trade Commission reported that scams targeting adults 60 and older cost $2.4 billion in 2024, up from $600 million in 2020, with losses concentrated in investment schemes. The FTC estimates real losses among older adults could reach as high as $81.5 billion, as most incidents go unreported.
Industry groups rallied behind the measure before the vote. The Insured Retirement Institute voiced support in a June 15 letter to Wagner and Gottheimer, arguing that a reasonable window to investigate suspected fraud can mean the difference between protecting retirement savings and losing assets forever. IRI noted that the earlier Senior$afe Act gave financial professionals tools to identify and report suspected exploitation but stopped short of granting explicit authority to pause a transaction.
Financial Services Institute President and CEO Dale Brown stated that the legislation "would equip mutual funds with tools to better help protect vulnerable investors," highlighting that advisors are frequently the first to spot warning signs. The Investment Company Institute, representing mutual fund companies, said the bill provides better tools to address suspected abuse of seniors and adults with disabilities, noting that "one in five Americans over the age of 65 has been a victim of financial exploitation, experiencing estimated losses of $2.9 billion."
The bill now heads to the Senate, where a companion measure, S. 2840, is pending before the Banking Committee. A nearly identical version passed the House 419-0 in 2023 but stalled in the Senate. The current legislation has strong bipartisan support and industry backing, increasing its chances of passage. For advisors, the new authority could complement existing tools like those from Edward Jones, which recently integrated AI fraud monitoring for 9 million clients.
As elder fraud losses mount, the bill represents a significant step in protecting vulnerable investors. The measure provides a clear framework for funds to act swiftly when exploitation is suspected, potentially saving billions in retirement savings. Advisors should be aware of the new authority and how it may affect their clients' accounts, particularly those with mutual fund holdings. The broader trend of regulatory action against elder fraud is also evident in recent legal shifts, as detailed in coverage of elder fraud losses hitting $7.7B in 2025.
