Trade Associations Call on Senators to Pass the Financial Exploitation Prevention Act
Commentary by Steven Lofchie
The Financial Services Institute ("FSI"), the Investment Company Institute ("ICI"), the Insured Retirement Institute ("IRI") and SIFMA urged passage of the bipartisan Financial Exploitation Prevention Act (S. 1841), a bill which would permit companies "to postpone securities redemption if they suspect exploitation of seniors or individuals unable to protect their interests."
Citing the Bureau of Justice Statistics, SIFMA reported that in 2022, "there were 167,889 reported fraud or other financial incidents committed against adults aged 65 or older." SIFMA asserted that "[i]n 2023, elder fraud complaints increased by 14%, with corresponding losses rising by 11%."
Last year, the House of Representatives unanimously passed the bill.
Statements
FSI President and CEO Dale Bread noted the increased risks from new technologies, including AI. He said that "financial fraudsters are growing more sophisticated in their schemes to defraud seniors" concluding that "this legislation equips our members with the necessary tools to best protect senior clients."
SIFMA President and CEO Ken Bentsen said, "[a]s financial crimes against seniors continue to rise, it is imperative that we equip our industry with the tools needed to combat these increasingly sophisticated schemes."
ICI CEO and President Eric J. Pan highlighted that "mutual funds are vital to building financial security for millions of Americans, and around a third of those are seniors."
IRI President and CEO Wayne Chopus said, "[o]ur members ... are often the first to notice that a client may be the victim of a financial crime." He urged the Senate "to act quickly to pass this bipartisan solution to protect retirees and their hard-earned savings from the potentially devastating effects of economic exploitation and fraud."
Commentary
Currently, FINRA and a number of State regulators expect financial intermediaries to take measures to delay transactions ordered by elderly account holders if the intermediaries have reason to believe that the transactions are the result of trickery or pressure. However, in many cases, there is no clear legal authority for the intermediaries to fail to execute the account holders' instructions. Accordingly, if there is agreement that such delays are beneficial in protecting elderly account holders, intermediaries should be given clear legal authority to impose the delays.
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