S. 2840 — Financial Exploitation Prevention Act of 2025

This section amends Section 22 of the Investment Company Act of 1940 (which generally requires open-end investment companies, or mutual funds, to redeem securities within seven days of tender) by adding subsection (h) to establish elective requirements for registered open-end investment companies and transfer agents servicing non-institutional direct-at-fund accounts (i.e., retail investor accounts held directly with the fund). Those requirements direct such entities to (1) request, document, and retain the name and contact information of at least one adult designated by the account holder for contact regarding the account; and (2) disclose in writing to the account holder that the designated individual may be contacted to address possible financial exploitation, confirm the holder's contact or health status, or identify a legal guardian, executor, trustee, or power of attorney holder. The section further adds subsection (i) to authorize such companies and transfer agents—upon reasonable belief that a redemption request is from a specified adult (i.e., vulnerable investor) and involves financial exploitation—to postpone payment beyond seven days for up to 15 business days, extendable by 10 business days if they notify the designated contact(s) within two days (with exceptions), conduct an internal review, hold funds in a demand deposit account, and document the process. (Thus, government authorities may further extend delays, and companies or agents must establish internal procedures for identifying exploitation, authorizing delays, and determining disposition of delayed proceeds.)