Congress should pass funding to protect seniors from financial exploitation
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Members of Congress have an opportunity to significantly help fight against senior financial exploitation in each of their respective states – and they should take it.

State securities regulators are on the front lines of the fight against elder financial exploitation. We are in every state and every community. But because of a procedural knot, states are not receiving the funds Congress authorized nearly a decade ago to help in this critical battle. Now Congress has a way to untangle it.

Nearly a decade ago, the Dodd-Frank Act included a provision that would have created a senior investor protection grant program for state regulators. The grant program, which was to be administered by the Consumer Financial Protection Bureau (CFPB), was intended to help state regulators combat misleading or fraudulent marketing of financial products to seniors.


The grants would have provided funding for technology, equipment, and training for prosecutors to increase the successful prosecution of salespersons and advisers who target seniors with the use of misleading designations. The grants would have also provided educational materials and training to seniors to increase awareness and understanding of misleading or fraudulent marketing.

This provision in the Dodd-Frank Act reflected a bipartisan concern that seniors are susceptible to fraud, and a recognition by Congress that this threat was likely to intensify with the aging of America’s “baby boom” generation.

Section 989(A) of the Dodd-Frank Act directed the CFPB to establish a tailored grant program designed to bolster state efforts to protect seniors against investment scams. States meeting the program’s qualifications would be eligible to receive up to $1.5 million spread over a period of three consecutive years. That may not sound like a lot of money to some. But to states used to making every dollar count, these grants would have significantly helped combat senior financial exploitation – and still could if Congress acts.

Unfortunately, Congress authorized these grants, but the CFPB’s funding structure makes it unclear whether the grants require an appropriation from Congress, or whether they could be funded in the same manner as all other CFPB activities.

A draft bill, “Empowering States to Protect Seniors from Bad Actors Act,” recently proffered by House Financial Services Committee Chairwoman Maxine Waters (D-Calif.), would amend Section 989(A) of the Dodd-Frank Act to clarify that the senior investor protection grant program should be funded in the same manner as all other CFPB activities, removing any purported impediments to the CFPB establishing this crucial program.


The CFPB has an obligation to implement this critical senior investor protection grant program, and it is imperative that it do so. If this grant program was implemented and funded as intended in 2010, state securities regulators could have hired more staff and funded more investor education outreach to assist in preventing and prosecuting fraud committed against senior investors.

Senior financial exploitation is a growing problem across the nation as our population ages. Last year alone state securities regulators brought 141 enforcement actions involving 758 senior victims.

NASAA and its members have been leaders in the fight against senior financial exploitation. In 2008, for example NASAA members adopted a model rule intended to protect senior investors from financial professionals passing themselves off as experts in senior financial matters without holding legitimate credentials. To date, 30 states and the District of Columbia have enacted regulations based on the NASAA model, the effectiveness of which Congress recognized by incorporating it as a qualifying eligibility requirement for the CFPB grant program.

And again in 2016, NASAA members adopted a model act to protect vulnerable adults from financial exploitation, which, among other provisions, requires financial professions to report suspected senior financial exploitation to state securities regulators. To date, 23 states have enacted laws based on, or like, this NASAA model.

In 2018, states with this law on their books received more than 400 reports of suspicious activity. Among these reports were those that led state securities regulators in six jurisdictions to act against a precious metals scheme suspected of convincing more than 750 people, mostly elderly, to collectively invest at least an estimated $100 million from their individual retirement accounts.

The threat to seniors is real, and so is the effectiveness of state securities regulators in combatting it.

But more needs to be done, especially as our senior population grows. Members of Congress have a real opportunity to protect the seniors in their jurisdictions by taking up and approving the “Empowering States to Protect Seniors from Bad Actors Act” to further strengthen enforcement and education and improve protections for all people aged 65 and older from financial exploitation.

State securities regulators applaud the House Financial Services Committee for considering the “Empowering States to Protect Seniors from Bad Actors Act,” and we look forward to working with Congress to ensure its prompt passage.

Christopher W. Gerold is President of the North American Securities Administrators Association (NASAA), the membership organization of state and provincial securities regulators in the United States, Canada and Mexico. He also serves as Chief of the New Jersey Bureau of Securities.