New Elder Protection Bill Allows Funds to Delay Payouts for Up to 25 Days When Exploitation Is Suspected

The Financial Exploitation Prevention Act of 2025 is aimed squarely at protecting older and vulnerable investors from getting swindled. The core idea is simple: give investment companies a legal mechanism to hit the pause button on transactions when they suspect financial fraud is happening. Specifically, this bill allows mutual funds (registered open-end investment companies) to delay redeeming, or cashing out, shares if they believe a customer aged 65 or older—or any adult with a debilitating mental or physical impairment—is being exploited.

The Catch: It’s Completely Optional

Before diving into the protections, here’s the crucial detail: the entire framework is voluntary. Mutual fund companies and their transfer agents have to formally tell the Securities and Exchange Commission (SEC) that they are “opting in” to these new rules. If they don’t opt in, these specific protections and requirements don't apply to them. This means that if your investment company chooses not to participate, your account won't benefit from this new safety net, even if you are a vulnerable adult. For the companies that do opt in, they must establish internal procedures, including identifying which employees have the authority to initiate or stop these payment delays.

The New Safety Brake: Trusted Contacts and Payment Delays

For companies that opt in, two major changes kick in. First, they must ask customers to designate a “trusted contact person”—an adult the company can reach out to regarding the account. The company must clearly disclose that this person might be contacted to verify the customer’s well-being or legal status. Second, and most importantly, if a company reasonably suspects a “specified adult” is being financially exploited when they request a redemption, the company can postpone the payment beyond the usual seven-day limit.

Initially, they can delay the payout for up to 15 business days. If, after that time, the company still reasonably believes exploitation is occurring, they can tack on another 10 business days, bringing the total potential delay to 25 business days—nearly five weeks. If they choose this extension, they must notify the designated contact person within two days, unless they suspect that contact person is involved in the exploitation. During this extended delay, the company must also start an internal review of the situation, and the money must be held in a demand deposit account.

Real-World Trade-Offs for Investors

For an investor, this bill is a double-edged sword. On one hand, if your aging parent is being pressured by a scammer or a bad actor to liquidate their retirement savings, this delay gives the fund company and potentially regulators time to intervene and save the money. That’s a huge win. On the other hand, 25 business days is a long time. If you’re a senior who genuinely needs that money for an emergency—say, an unexpected medical bill or a necessary home repair—and the fund company incorrectly suspects exploitation, you could be locked out of your own funds for almost a month. Companies that opt in are required to notify customers about this possibility in their prospectuses, so investors will know about the risk upfront.

Finally, the bill doesn't just stop at the investment companies. Within a year, the SEC is tasked with working with other major financial regulators (like the CFPB and FINRA) to deliver a report to Congress. This report is supposed to suggest what further regulatory or legislative changes are needed to better protect vulnerable security holders. Essentially, this bill is a pilot program for the industry, setting the stage for potentially broader, and maybe even mandatory, protections down the road.