Bipartisan Senate bill targets senior financial exploitation

Bipartisan Senate legislation to combat senior financial exploitation gives backers hope the measure could be approved by Congress this year.

The Empowering States to Protect Seniors from Bad Actors Act would provide $10 million in grants annually to state regulators to fund investigations and prosecutions related to financial fraud involving seniors, hire staff, enhance technology and conduct public education initiatives.

The House Financial Services Committee, whose votes on most legislation over the last year have been split along partisan lines, unanimously approved similar legislation in November. The Senate companion bill was introduced Thursday by Sens. Chris Van Hollen, D-Md., Tim Scott, R-S.C., Raphael Warnock, D-Ga., and Cynthia Lummis, R-Wyo.

The House bill is awaiting a vote by the full House. The Senate bill has been referred to the Senate Banking Committee, where Van Hollen is a member. The measure could move on its own in each chamber or be attached to other legislation.

“We’re rather optimistic about its prospects,” said Dylan Bruce, financial services counsel at the Consumer Federation of America.

Bruce’s organization is one of a wide array of groups that work on issues affecting the financial advice sector that support the legislation. They include AARP, the Certified Financial Planner Board of Standards Inc., the Financial Services Institute, the Insured Retirement Institute, the National Association of Insurance and Financial Advisors, and the National Association of Personal Financial Advisors.

Probably the most ardent advocates for the bill are state regulators.

“It’s a top priority for us,” said Kristen Hutchens, deputy director of policy and government affairs for the North American Securities Administrators Association. “We’re really happy with where we are with the legislation …[and] NASAA urges swift bipartisan approval at the earliest opportunity.”

States have been pushing for the senior investor protection grant program ever since it was authorized in 2010 by the Dodd-Frank financial reform law. But it was set up in the Consumer Financial Protection Bureau and never got off the ground.

The bills being considered by Congress would move the program to the Securities and Exchange Commission, a shift in responsibility called for by Rick Fleming, the SEC's investor advocate, in his office’s report to Congress in December 2020.

The grant program would give state regulators more firepower to direct toward stopping senior exploitation. The most recent NASAA enforcement report indicates that in 2020, state regulators received 806 complaints about senior fraud, opened 595 investigations and took 290 enforcement actions.

In 2016, NASAA approved a model rule on senior financial exploitation that has been adopted by 32 states. It gives brokers and investment advisers latitude to halt disbursements from investment accounts if they believe an elderly or vulnerable person is the victim of fraud.

The coronavirus pandemic could lend more urgency to addressing senior financial fraud, as fraudsters prey on seniors who are isolating.

“The pandemic exacerbated many of the factors that contribute to the susceptibility of seniors to scams and frauds,” Bruce said.