117TH CONGRESS 
1ST SESSION H. R. 2265 
AN ACT 
To amend the Investment Company Act of 1940 to postpone 
the date of payment or satisfaction upon redemption 
of certain securities in the case of the financial exploi-
tation of specified adults, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Financial Exploitation 
Prevention Act of 2021’’. 
SEC. 2. REDEMPTION OF CERTAIN SECURITIES POST-
PONED. 
(a) IN GENERAL.—Section 22 of the Investment 
Company Act of 1940 (15 U.S.C. 80a–22) is amended by 
adding at the end the following: 
‘‘(h) REQUIREMENTS WITH RESPECT TO NON-INSTI-
TUTIONAL DIRECT AT-FUND ACCOUNTS.— 
‘‘(1) ELECTION.— 
‘‘(A) IN GENERAL.—A registered open-end 
investment company and a transfer agent de-
scribed under paragraph (2) may elect to com-
ply with the requirements under paragraph (2) 
and subsection (i) by notifying the Commission 
of such election. 
‘‘(B) EFFECT OF ELECTION.—Paragraph 
(2) and subsection (i) shall only apply to a reg-
istered open-end investment company and a 
transfer agent that have made the election 
under subparagraph (A). 
‘‘(2) REQUIREMENTS.—In the case of a cus-
tomer who is a holder of a non-institutional account 
held directly with a registered open-end investment 
company and serviced by a transfer agent (a ‘direct-
at-fund account’), the company and transfer agent 
shall— 
‘‘(A) request from such customer the name 
and contact information of at least one indi-
vidual who— 
‘‘(i) is at the time of such request an 
adult; and 
‘‘(ii) may be contacted with respect to 
such account; 
‘‘(B) document and retain the information 
received pursuant to subparagraph (A); and 
‘‘(C) disclose to such customer in writing 
(including through electronic delivery) that such 
company or transfer agent may contact an indi-
vidual specified pursuant to subparagraph (A) 
with respect to the account of such customer 
to— 
‘‘(i) address possible financial exploi-
tation of such customer; 
‘‘(ii) confirm the contact information 
or health status of the customer; or 
‘‘(iii) identify any legal guardian, ex-
ecutor, trustee, or holder of a power of at-
torney of the customer.
‘‘(i) REDEMPTION OF CERTAIN SECURITIES POST-
PONED.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(e), a registered open-end investment company or a 
transfer agent acting on behalf of such company 
may postpone the date of payment or satisfaction 
upon redemption of any redeemable security in ac-
cordance with its terms for more than seven days 
after the tender of such security to such company or 
its agent designated for that purpose for redemption 
if such company or agent reasonably believes that— 
‘‘(A) the redemption is requested by a se-
curity holder who is a specified adult; and 
‘‘(B) financial exploitation has occurred, is 
occurring, or has been attempted with respect 
to such redemption. 
‘‘(2) DURATION.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B) and (C), a registered open- 
end investment company or a transfer agent 
acting on behalf of such company may postpone 
the date of payment or satisfaction upon re-
demption of a redeemable security under para-
graph (1) for a period of not more than 15 
business days.
‘‘(B) EXTENSION
UPON
DETERMINATION 
OF
EXPLOITATION.—The period described in 
subparagraph (A) may be extended by an addi-
tional 10 business days if the registered open- 
end investment company or a transfer agent 
acting on behalf of such company— 
‘‘(i) reasonably believes that— 
‘‘(I) the redemption is requested 
by a security holder who is a specified 
adult; and 
‘‘(II) financial exploitation has 
occurred, is occurring, or has been at-
tempted with respect to such redemp-
tion; 
‘‘(ii) subject to subparagraph (D), not 
later than 2 days after making a deter-
mination under clause (i), notifies the indi-
viduals specified by such security holder 
under subsection (h)(2)(A) in writing (in-
cluding through electronic delivery) of the 
extension of the period described in sub-
paragraph (A) under this subparagraph 
and the reason for such extension;
‘‘(iii) initiates an internal review of 
the facts and circumstances relating to the 
determination under clause (i); 
‘‘(iv) holds amounts related to the de-
layed payment or satisfaction upon re-
demption of the redeemable security in a 
demand deposit account; and 
‘‘(v) documents and retains records 
related to carrying out clause (iv) and in-
cludes such records in the first required 
account statement of the security holder 
provided after the date on which the deter-
mination is made under clause (i). 
‘‘(C) EXTENSION
BY
GOVERNMENT.—A 
State regulator, administrative agency of com-
petent jurisdiction, or court of competent juris-
diction may extend the period described in sub-
paragraph (A). 
‘‘(D) NOTIFICATION.— 
‘‘(i) 
EXCEPTION.—Subparagraph 
(B)(ii) shall not apply if a registered open- 
end investment company or transfer agent 
acting on behalf of such company reason-
ably believes that an individual required to 
be notified under such subparagraph is,
has been, or will subject the security holder 
who identified such individual under sub-
section (h)(2)(A) to financial exploitation. 
‘‘(ii) 
REASONABLE
EFFORTS.—An 
open-end investment company or transfer 
agent acting on behalf of such company 
shall be considered in compliance with sub-
paragraph (B)(ii) if such company or 
transfer agent makes a reasonable effort to 
contact the individuals specified by a secu-
rity holder under subsection (h)(2)(A). 
‘‘(E) INTERNAL PROCEDURES.—An open- 
end investment company or transfer agent act-
ing on behalf of such company shall establish 
procedures to carry out the requirements under 
this subsection, including procedures— 
‘‘(i) related to the identification and 
reporting of matters related to the finan-
cial exploitation of specified adults; 
‘‘(ii) to determine whether to release 
or reinvest delayed redemption proceeds, 
taking into account the facts and cir-
cumstances of each case, should the inter-
nal review under subparagraph (B)(iii)
support the reasonable belief described in 
subparagraph (B)(i); 
‘‘(iii) identifying each employee of the 
company or transfer agent with authority 
to establish, extend, or terminate a period 
described in paragraph (1) or subpara-
graph (A); 
‘‘(iv) in the case of a transfer agent, 
that are reasonably designed to ensure that 
the employees of such transfer agent com-
ply with this subsection; and 
‘‘(v) in the case of an open-end invest-
ment company, establishing periodic re-
porting requirements under which a trans-
fer agent acting on behalf of such company 
shall notify such company of— 
‘‘(I) each extension under sub-
paragraph (B) authorized by such 
transfer agent; 
‘‘(II) each finding by the transfer 
agent under subparagraph (B)(i); 
‘‘(III) each notification under 
subparagraph (B)(ii) carried out by 
such transfer agent; and
‘‘(IV) the results of each internal 
review initiated by the transfer agent 
under subparagraph (B)(iii). 
‘‘(F) INFORMATION INCLUDED IN CERTAIN 
STATEMENTS.—An open-end investment com-
pany shall include in each prospectus or state-
ment of additional information a notification 
that the company or transfer agent acting on 
behalf of such company may postpone redemp-
tion of certain securities under this subsection. 
‘‘(G) RECORD RETENTION.—An open-end 
investment company or transfer agent acting on 
behalf of such company shall— 
‘‘(i) document and retain records of— 
‘‘(I) each postponement of re-
demption under subparagraph (A), 
(B), and (C); 
‘‘(II) each finding under subpara-
graph (B)(i); 
‘‘(III) the name and position of 
each employee described in subpara-
graph (E)(iii); 
‘‘(IV) each notification carried 
out under subparagraph (B)(ii); and
‘‘(V) the results of each internal 
review initiated under subparagraph 
(B)(iii); and 
‘‘(ii) make such records available to 
the Commission at the request of the Com-
mission. 
‘‘(3) SPECIFIED ADULT DEFINED.—In this sub-
section, the term ‘specified adult’ means— 
‘‘(A) an individual age 65 or older; or 
‘‘(B) an individual age 18 or older who a 
registered open-end investment company or a 
transfer agent acting on behalf of such com-
pany reasonably believes has a mental or phys-
ical impairment that renders the individual un-
able to protect the individual’s own interests.’’. 
(b) RECOMMENDATIONS.— 
(1) IN GENERAL.—Not later than 1 year after 
the date of the enactment of this section, the Securi-
ties and Exchange Commission, in consultation with 
the entities specified in paragraph (2), shall submit 
to Congress a report that includes recommendations 
regarding the regulatory and legislative changes nec-
essary to address the financial exploitation of secu-
rity holders who are specified adults (as defined in 
subsection (i)(3) of section 22 of the Investment
Company Act of 1940 (15 U.S.C. 80a–22), as added 
by this section). 
(2) CONSULTATION.—The entities specified in 
this paragraph are as follows: 
(A) The Commodity Futures Trading 
Commission. 
(B) The Director of the Bureau of Con-
sumer Financial Protection. 
(C) The Financial Industry Regulatory Au-
thority. 
(D) The North American Securities Ad-
ministrators Association. 
(E) The Board of Governors of the Fed-
eral Reserve System. 
(F) The Comptroller of the Currency. 
(G) The Federal Deposit Insurance Cor-
poration. 
SEC. 3. DETERMINATION OF BUDGETARY EFFECTS. 
The budgetary effects of this Act, for the purpose of 
complying with the Statutory Pay-As-You-Go Act of 2010, 
shall be determined by reference to the latest statement 
titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 
Act, submitted for printing in the Congressional Record 
by the Chairman of the House Budget Committee, pro-
vided that such statement has been submitted prior to the 
vote on passage. 
Passed the House of Representatives October 25, 
2021. 
Attest: 
Clerk.