I 

111TH CONGRESS 

1ST SESSION H. R. 3551 

To protect older Americans from misleading and fraudulent marketing 

practices, with the goal of increasing retirement security. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 10, 2009 

Mr. HODES (for himself and Ms. MOORE of Wisconsin) introduced the following bill; which was referred to the Committee on the Judiciary, and 

in addition to the Committee on Financial Services, for a period to be 

subsequently determined by the Speaker, in each case for consideration 

of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To protect older Americans from misleading and fraudulent 

marketing practices, with the goal of increasing retirement security. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Senior Investment Pro5 tection Act of 2009’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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1 (1) many seniors are targeted by salespersons 

2 and advisers using misleading certifications and pro3 fessional designations; 

4 (2) many certifications and professional des5 ignations used by salespersons and advisers rep6 resent limited training or expertise, and may in fact 

7 be of no value with respect to advising seniors on fi8 nancial and estate planning matters, and far too 

9 often, such designations are obtained simply by at10 tending a weekend seminar and passing an open 

11 book, multiple choice test; 

12 (3) many seniors have lost their life savings be13 cause salespersons and advisers holding a misleading 

14 designation have steered them toward products that 

15 were unsuitable for them, given their retirement 

16 needs and life expectancies; 

17 (4) seniors have a right to clearly know whether 

18 they are working with a qualified adviser who under19 stands the products and is working in their best in20 terest or a self-interested salesperson or adviser ad21 vocating particular products; and 

22 (5) many existing State laws and enforcement 

23 measures addressing the use of certifications, profes24 sional designations, and suitability standards in sell25 ing financial products to seniors are inadequate to 


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1 protect senior investors from salespersons and advis2 ers using such designations. 

3 SEC. 3. DEFINITIONS. 

4 As used in this Act— 

5 (1) the term ‘‘misleading designation’’— 

6 (A) means the use of a purported certifi7 cation, professional designation, or other cre8 dential, that indicates or implies that a sales9 person or adviser has special certification or 

10 training in advising or servicing seniors; and 

11 (B) does not include any legitimate certifi12 cation, professional designation, license, or 

13 other credential, if— 

14 (i) it has been offered by an academic 

15 institution having regional accreditation; or 

16 (ii) it meets the standards for certifi17 cations, licenses, and professional designa18 tions outlined by the North American Se19 curities Administrators Association (in this 

20 Act referred to as the ‘‘NASAA’’) Model 

21 Rule on the Use of Senior-Specific Certifi22 cations and Professional Designations, or 

23 it was issued by or obtained from any 

24 State; 


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1 (2) the term ‘‘financial product’’ means securi2 ties, insurance products (including insurance prod3 ucts which pay a return, whether fixed or variable), 

4 and bank and loan products; 

5 (3) the term ‘‘misleading or fraudulent mar6 keting’’ means the use of a misleading designation 

7 in selling or advising a senior in the sale of a finan8 cial product; 

9 (4) the term ‘‘senior’’ means any individual who 

10 has attained the age of 62 or older; and 

11 (5) the term ‘‘State’’ means each of the 50 

12 States, the District of Columbia, and the unincor13 porated territories of Puerto Rico and the U.S. Vir14 gin Islands. 

15 SEC. 4. GRANTS TO STATES FOR ENHANCED PROTECTION 

16 OF SENIORS FROM BEING MISLED BY FALSE 

17 DESIGNATIONS. 

18 (a) GRANT PROGRAM.—The Attorney General of the 

19 United States (in this Act referred to as the ‘‘Attorney 

20 General’’)— 

21 (1) shall establish a program in accordance with 

22 this Act to provide grants to States— 

23 (A) to investigate and prosecute misleading 

24 and fraudulent marketing practices; or 


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1 (B) to develop educational materials and 

2 training aimed at reducing misleading and 

3 fraudulent marketing of financial products to4 ward seniors; and 

5 (2) may establish such performance objectives, 

6 reporting requirements, and application procedures 

7 for States and State agencies receiving grants under 

8 this Act as the Attorney General determines are nec9 essary to carry out and assess the effectiveness of 

10 the program under this Act. 

11 (b) USE OF GRANT AMOUNTS.—A grant under this 

12 Act may be used (including through subgrants) by the 

13 State or the appropriate State agency designated by the 

14 State— 

15 (1) to fund additional staff to identify, inves16 tigate, and prosecute (through civil, administrative, 

17 or criminal enforcement actions) cases involving mis18 leading or fraudulent marketing of financial prod19 ucts to seniors; 

20 (2) to fund technology, equipment, and training 

21 for regulators, prosecutors, and law enforcement in 

22 order to identify salespersons and advisers who tar23 get seniors through the use of misleading designa24 tions; 


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1 (3) to fund technology, equipment, and training 

2 for prosecutors to increase the successful prosecution 

3 of those targeting seniors with the use of misleading 

4 designations; 

5 (4) to provide educational materials and train6 ing to regulators on the appropriateness of the use 

7 of designations by salespersons and advisers of fi8 nancial products; 

9 (5) to provide educational materials and train10 ing to seniors to increase their awareness and under11 standing of designations; 

12 (6) to develop comprehensive plans to combat 

13 misleading or fraudulent marketing of financial 

14 products to seniors; and 

15 (7) to enhance provisions of State law that 

16 could offer additional protection for seniors against 

17 misleading or fraudulent marketing of financial 

18 products. 

19 (c) GRANT REQUIREMENTS.— 

20 (1) MAXIMUM.—The amount of a grant under 

21 this Act may not exceed $500,000 per fiscal year per 

22 State, if all requirements of paragraphs (2), (3), (4), 

23 and (5) are met. Such amount shall be limited to 

24 $100,000 per fiscal year per State in any case in 

25 which the State meets the requirements of— 


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1 (A) paragraphs (2) and (3), but not each 

2 of paragraphs (4) and (5); or 

3 (B) paragraphs (4) and (5), but not each 

4 of paragraphs (2) and (3). 

5 (2) STANDARD DESIGNATION RULES FOR SECU6 RITIES.—A State shall have adopted rules on the ap7 propriate use of designations in the offer or sale of 

8 securities or investment advice, which shall meet or 

9 exceed the minimum requirements of the NASAA 

10 Model Rule on the Use of Senior-Specific Certifi11 cations and Professional Designations, as in effect 

12 on the date of enactment of this Act, or any suc13 cessor thereto, as determined by the Attorney Gen14 eral. 

15 (3) SUITABILITY RULES FOR SECURITIES.—A 

16 State shall have adopted standard rules on the suit17 ability requirements in the sale of securities, which 

18 shall, to the extent practicable, conform to the min19 imum requirements on suitability imposed by self20 regulatory organization rules under the securities 

21 laws (as defined in section 3 of the Securities Ex22 change Act of 1934), as determined by the Attorney 

23 General. 

24 (4) STANDARD DESIGNATION RULES FOR IN25 SURANCE PRODUCTS.—A State shall have adopted 


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1 standard rules on the appropriate use of designa2 tions in the sale of insurance products, which shall, 

3 to the extent practicable, conform to the minimum 

4 requirements of the National Association of Insur5 ance Commissioners Model Regulation on the Use of 

6 Senior-Specific Certifications and Professional Des7 ignations in the Sale of Life Insurance and Annu8 ities, as in effect on the date of enactment of this 

9 Act, or any successor thereto, as determined by the 

10 Attorney General. 

11 (5) SUITABILITY AND SUPERVISION RULES FOR

12 ANNUITY PRODUCTS.— 

13 (A) IN GENERAL.—A State shall have 

14 adopted rules governing insurer supervision of, 

15 suitability of, and insurer and insurance pro16 ducer conduct relating to, the sale of annuity 

17 products, including fixed and index annuities. 

18 (B) ANNUITY PRODUCTS CRITERIA.—The 

19 rules required by subparagraph (A) shall, to the 

20 extent practicable (as determined by the Attor21 ney General), provide— 

22 (i) that insurers, and insurance pro23 ducers are responsible for, and liable for 

24 penalties for, the suitability of each rec25 ommended annuity transaction; 


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1 (ii) that insurers and insurance pro2 ducers are required to apply a standard for 

3 determining the suitability of each rec4 ommended annuity transaction, including 

5 fixed and index annuities, that is at least 

6 as protective of the interests of the con7 sumer as rule 2821(b) of the Financial In8 dustry Regulatory Authority (in this para9 graph referred to as ‘‘FINRA’’), as in ef10 fect on the date of enactment of this Act, 

11 or any successor to such rule; 

12 (iii) that insurers and insurance pro13 ducers are required to maintain a process 

14 for review of the suitability, and approval 

15 or disapproval, of each recommended annu16 ity transaction that is at least as protective 

17 of the interests of the consumer as the 

18 principal review required under rule 

19 2821(c) of FINRA, as in effect on the date 

20 of enactment of this Act, or any successor 

21 to such rule; 

22 (iv) that insurers and insurance pro23 ducers are required to maintain processes 

24 for the supervision of direct annuity sales 

25 and insurance producer-recommended anVerDate Nov 24 2008 22:11 Sep 10, 2009 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3551.IH H3551

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1 nuity sales (including procedures for the 

2 insurer to obtain and confirm consumer 

3 suitability information and for the insurer 

4 to confirm consumer understanding of the 

5 annuity transaction) that are at least as 

6 protective of the interests of the consumer 

7 as member broker and dealer supervision 

8 requirements of FINRA, as in effect on 

9 the date of enactment of this Act, or any 

10 successor to such requirements; 

11 (v) that insurers are required to verify 

12 that each insurance producer successfully 

13 completes, and each insurance producer is 

14 required to receive, training designed to 

15 ensure that the insurance producer is com16 petent to recommend each class of annuity; 

17 (vi) that insurers are required to 

18 verify that insurance producers receive, 

19 and insurance producers are required to 

20 receive, training regarding the features of 

21 each offered annuity product, to an extent 

22 that is at least as protective of the inter23 ests of the consumer as the FINRA firm 

24 element training requirements, as in effect 


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1 on the date of enactment of this Act, or 

2 any successor to such requirements; 

3 (vii) for coordination of such rules 

4 with the rules of FINRA governing mem5 ber brokers, dealers, and security rep6 resentatives, to the extent appropriate, 

7 consistent with protecting the interests of 

8 consumers, for State insurance regulators 

9 to rely on, or to avoid duplication of 

10 FINRA rules; and 

11 (viii) for exemption from such rules 

12 only if such exemption is consistent with 

13 the protection of consumers. 

14 SEC. 5. APPLICATIONS. 

15 To be eligible for a grant under this Act, the State 

16 or appropriate State agency shall submit to the Attorney 

17 General a proposal to use the grant money to protect sen18 iors from misleading or fraudulent marketing techniques 

19 in the offer and sale of financial products, which applica20 tion shall— 

21 (1) identify the scope of the problem; 

22 (2) describe how the proposed program will help 

23 to protect seniors from misleading or fraudulent 

24 marketing in the sale of financial products, includ25 ing, at a minimum— 


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1 (A) by proactively identifying senior vic2 tims of misleading and fraudulent marketing in 

3 the offer and sale of financial products; 

4 (B) how the proposed program can assist 

5 in the investigation and prosecution of those 

6 using misleading or fraudulent marketing in the 

7 offer and sale of financial products to seniors; 

8 and 

9 (C) how the proposed program can help 

10 discourage and reduce future cases of mis11 leading or fraudulent marketing in the offer 

12 and sale of financial products to seniors; and 

13 (3) describe how the proposed program is to be 

14 integrated with other existing State efforts. 

15 SEC. 6. LENGTH OF PARTICIPATION. 

16 A State receiving a grant under this Act shall be pro17 vided assistance funds for a period of 3 years, after which 

18 the State may reapply for additional funding. 

19 SEC. 7. AUTHORIZATION OF APPROPRIATIONS. 

20 There are authorized to be appropriated to carry out 

21 this Act, $8,000,000 for each of the fiscal years 2010 

22 through 2014. 

Æ 


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