Financial Exploitation Prevention Act of 2025

This bill lets certain investment companies pause a customer’s redemption payment if they reasonably think the customer is being financially exploited. It applies only if the company and its transfer agent choose to adopt these protections by notifying the Securities and Exchange Commission; the rules apply only to those that opt in. For customers who hold a non‑institutional account directly with a company, the company must ask for a trusted person’s contact information and tell the customer they may contact that person to address possible exploitation, confirm contact or health status, or find a legal guardian or power of attorney. A “specified adult” means someone age 65 or older, or an adult with a mental or physical impairment that makes it hard to protect their own interests.

If exploitation is suspected, the company can delay the redemption payment for up to 15 business days, and extend it by 10 more business days if they still reasonably believe exploitation has happened or is being attempted. A state regulator or court can extend it further. During an extension, the company must start an internal review, try to notify the trusted contact unless that person may be involved, and hold the money in a demand deposit account while they check. Companies must set up procedures, keep records, and include a notice in their prospectus or other materials that redemptions may be postponed in these cases. The SEC must send Congress recommendations within one year on other steps to fight financial exploitation of these customers.

Key points

• Who is affected: Customers 65+ or adults with certain impairments; companies and transfer agents that choose to adopt these rules; and customers with accounts held directly with a company (non‑institutional, direct‑at‑fund accounts).
• What changes: Companies that opt in may pause a redemption they believe is tied to exploitation, contact a trusted person the customer named, review the situation, hold the funds in a bank account during the pause, and must keep records and provide notice in their materials .
• When: Delays can last up to 15 business days, with a possible 10‑day extension and further extension by a regulator or court; the SEC must deliver a report within one year after enactment .