The House Financial Services Committee unanimously passed a measure to strengthen financial fraud protections for senior citizens this week, sending the measure to the full House for a vote.

The Senior Security Act directs the Securities and Exchange Commission (SEC) to investigate the rigorous fraud that senior investors face and make recommendations to Congress about additional measures needed to increase protections for more vulnerable Americans.

The fast-moving, bipartisan legislation was introduced by Rep. Ann Wagner (R-Mo.) and Rep. Josh Gottheimer (D-N.J.) on April 13.
 
Financial exploitation and abuse costs senior investors an estimated $2.9 billion annually and impacts roughly one in ten older Americans, according to the 2019 Fraud Book, compiled by Sen. Susan Collins (R-Maine).

The average loss per reported incident of financial abuse or exploitation against seniors is estimated to be $120,000, a figure that tracks the average amount Americans have saved for retirement.

“As a result, financial abuse can erase a lifetime of savings and leave an older American in financial ruin. With the population of older Americans expected to double in size to nearly 84 million citizens by 2050, there needs to be a concerted effort to combat financial exploitation,” Paul J. Richman, chief government and political affairs officer at the Insured Retirement Institute (IRI), and John B. Jennings, director of government and political affairs at IRI, said in a letter to lawmakers.

The bill also directs the Government Accountability Office (GAO) to study and report on the economic impact and consequences of elder financial exploitation to help policymakers better understand the breadth and scope that financial exploitation of older Americans has on the U.S. economy.

Advisors and brokers “are often the first to notice that a client may be the victim of a financial crime. Our members are committed to protecting older Americans and ensuring their clients' hard-earned retirement savings are protected from exploitation and fraud,” said Richman.

Increasing protections and resources to combat financial fraud and exploitation is a top legislative and regulatory objective for IRI, according to the trade group’s 2023 Federal Retirement Security Blueprint.
 
Rep. Wagner is also the author of the Financial Exploitation Prevention Act, which was approved unanimously by the full House and awaits a vote in the Senate. The bill would allow mutual funds to delay the redemption of a security if financial exploitation of a senior or other vulnerable person is suspected. Just a few days later, the full House, on a 419-0 vote, sent it to the Senate.

Eric Pan, president and CEO of the Investment Company Institute, said the legislation “would enable mutual funds and their transfer agents to better protect seniors by delaying the redemption of securities, if there is reasonable belief that financial exploitation has occurred.”

The bill would allow mutual funds to delay redemptions initially for 15 days and then add another 10 days if senior exploitation is found to be the cause of the transfer. The legislation would create a federal version of the state and Finra rules that allow investment advisors and brokers to put a stop order on disbursements from investment accounts if they suspect senior abuse.