S.F. 2397 Section 1. NEW SECTION . 502.801 Definitions. 1 For purposes of this article, unless the context otherwise 2 requires: 3 1. “Eligible adult” means any of the following: 4 a. A person sixty-five years of age or older. 5 b. A dependent adult as defined in section 235B.2. 6 2. “Financial exploitation” means any act or omission taken 7 by a person to wrongfully and knowingly deprive an eligible 8 adult of money, assets, or property, or to obtain control over 9 or otherwise use, convert, or divert the benefits, property, 10 resources, or assets of the eligible adult by intimidation, 11 deception, coercion, fraud, extortion, or undue influence. 12 3. “Permissible third party” means any of the following: 13 a. A person the eligible adult previously designated to 14 receive the notification described in section 502.804. 15 b. A person otherwise permitted to receive the notification 16 described in section 502.804 by any state or federal law or any 17 rule issued by the financial industry regulatory authority. 18 4. “Qualified individual” means any of the following: 19 a. An agent who has received training pursuant to section 20 502.808. 21 b. An investment adviser representative who has received 22 training pursuant to section 502.808. 23 c. A person who has received training pursuant to 24 section 502.808 and who serves in a supervisory, compliance, 25 senior investor protection, or legal capacity for any of the 26 following: 27 (1) A broker-dealer. 28 (2) An investment adviser. 29 Sec. 2. NEW SECTION . 502.802 Notification to administrator. 30 If a broker-dealer, investment adviser, or qualified 31 individual reasonably believes financial exploitation of 32 an eligible adult has occurred, has been attempted, or is 33 being attempted, the broker-dealer, investment adviser, or 34 qualified individual may promptly notify the administrator. 35 -1- LSB 5358SV (2) 88 ja/rn 1/ 8

S.F. 2397 The administrator may adopt rules regarding the form and manner 1 of the notification under this section. 2 Sec. 3. NEW SECTION . 502.803 Notification to administrator 3 —— immunity. 4 A broker-dealer, investment adviser, or qualified individual 5 who, acting reasonably and in good faith, makes a disclosure 6 of information to the administrator pursuant to this article 7 shall be immune from administrative or civil liability that 8 might otherwise arise from such disclosure or for any failure 9 to notify the eligible adult of the disclosure. This section 10 shall not abrogate or modify any existing statutory or common 11 law privileges or immunities. 12 Sec. 4. NEW SECTION . 502.804 Notification to permissible 13 third party. 14 1. If a broker-dealer, investment adviser, or qualified 15 individual reasonably believes financial exploitation of 16 an eligible adult has occurred, has been attempted, or is 17 being attempted, the broker-dealer, investment adviser, or 18 qualified individual may notify a permissible third party. The 19 administrator may adopt rules regarding the form and manner of 20 the notification under this section. 21 2. Broker-dealers, investment advisers, and qualified 22 individuals shall not notify a permissible third party the 23 broker-dealer, investment adviser, or qualified individual 24 reasonably suspects of financial exploitation or other abuse 25 of the eligible adult. 26 Sec. 5. NEW SECTION . 502.805 Notification to permissible 27 third party —— immunity. 28 A broker-dealer, investment adviser, or qualified individual 29 who, acting reasonably and in good faith, complies with section 30 502.804 shall be immune from any administrative or civil 31 liability that might otherwise arise from such disclosure. 32 Sec. 6. NEW SECTION . 502.806 Disbursements or transactions 33 —— delay. 34 1. If a broker-dealer, investment adviser, or qualified 35 -2- LSB 5358SV (2) 88 ja/rn 2/ 8

S.F. 2397 individual reasonably believes a disbursement or transaction 1 will likely result in or contribute to the financial 2 exploitation of an eligible adult, the broker-dealer, 3 investment adviser, or qualified individual shall initiate an 4 internal review of the requested disbursement or transaction. 5 2. A broker-dealer or investment adviser may delay a 6 disbursement or transaction from an eligible adult’s account or 7 an account on which an eligible adult is a beneficiary if all 8 of the following apply: 9 a. The broker-dealer, investment adviser, or qualified 10 individual reasonably believes, after initiating the internal 11 review referenced in subsection 1, that the requested 12 disbursement or transaction will likely result in or contribute 13 to the financial exploitation of an eligible adult. 14 b. Immediately, but in no event more than two business 15 days after the disbursement or transaction is delayed, 16 the broker-dealer or investment adviser provides written 17 notification of the delay and the reason for the delay to 18 all persons authorized to transact business on the account. 19 Broker-dealers, investment advisers, and qualified individuals 20 shall not notify a person authorized to transact business 21 on the account if the broker-dealer, investment adviser, 22 or qualified individual reasonably believes the person 23 has committed financial exploitation, attempted financial 24 exploitation, or other abuse of the eligible adult. 25 c. Immediately, but in no event more than two business 26 days after the disbursement or transaction is delayed, the 27 broker-dealer or investment adviser notifies the administrator 28 of the delay and provides to the administrator the reason 29 for the delay, including the results of the internal review 30 referenced in subsection 1. 31 d. The broker-dealer continues the internal review of the 32 suspected or attempted financial exploitation of the eligible 33 adult, as necessary, and provides the administrator with 34 updates upon request. 35 -3- LSB 5358SV (2) 88 ja/rn 3/ 8

S.F. 2397 3. Any delay of a disbursement or transaction authorized by 1 this section will expire upon the first to occur of any of the 2 following: 3 a. A determination by the broker-dealer or investment 4 adviser that the disbursement or transaction will not result in 5 or contribute to financial exploitation of the eligible adult. 6 b. Fifteen business days after the date on which the 7 broker-dealer or investment adviser first delayed disbursement 8 of the funds or transaction, unless the administrator requests 9 the broker-dealer or investment adviser to extend the delay, 10 in which case the delay shall expire no more than twenty-five 11 business days after the date on which the broker-dealer or 12 investment adviser first delayed the disbursement of the funds 13 or the transaction. 14 4. Notwithstanding subsection 3, upon the petition of 15 the administrator, the broker-dealer or investment adviser 16 who initiated the delay pursuant to this section, or another 17 interested party, a court of competent jurisdiction may enter 18 an order terminating, extending, or modifying the delay of the 19 disbursement or transaction and may order other protective 20 relief. 21 5. The administrator may adopt rules regarding the form and 22 manner of the notifications under this section. 23 Sec. 7. NEW SECTION . 502.807 Disbursements of transactions 24 —— delay —— immunity. 25 A broker-dealer or investment adviser who, acting reasonably 26 and in good faith, complies with section 502.806 shall be 27 immune from any administrative or civil liability that 28 might otherwise arise from such delay in a disbursement or 29 transaction. 30 Sec. 8. NEW SECTION . 502.808 Training requirements. 31 1. A broker-dealer or investment adviser shall provide 32 to its qualified individuals training appropriate to the job 33 responsibilities of a qualified individual. The training shall 34 include all of the following: 35 -4- LSB 5358SV (2) 88 ja/rn 4/ 8

S.F. 2397 a. Instruction on how to identify the suspected or attempted 1 exploitation of an eligible adult, including common signs 2 indicating the financial exploitation of an eligible adult, 3 and how to provide notification regarding the suspected or 4 attempted exploitation of an eligible adult. 5 b. Instruction regarding privacy and confidentiality 6 requirements. 7 2. A broker-dealer or investment adviser shall provide 8 the training required by this section as soon as reasonably 9 practicable, but at least within one year after the date 10 the qualified individual begins employment with or becomes 11 affiliated or associated with a broker-dealer or investment 12 adviser. 13 3. The administrator may adopt rules specifying the content 14 and method of the training required by this section. 15 Sec. 9. NEW SECTION . 502.809 Records. 16 1. A broker-dealer or investment adviser shall provide 17 access to or copies of records that are relevant to the 18 suspected or attempted financial exploitation of an eligible 19 adult to the administrator and to law enforcement, either as 20 part of a referral to the administrator or law enforcement, 21 or upon the request of the administrator or law enforcement 22 pursuant to an investigation. The records may include 23 historical records as well as records relating to the most 24 recent transactions that may comprise financial exploitation of 25 an eligible adult. 26 2. All records made available to the administrator, the 27 department of human services, or law enforcement pursuant to 28 this section shall be considered confidential public records 29 under chapter 22 and shall not be available for examination by 30 the public pursuant to section 22.2. 31 3. Nothing in this section shall limit or otherwise impede 32 the authority of the administrator to access or examine the 33 books and records of broker-dealers or investment advisers as 34 otherwise provided by law. 35 -5- LSB 5358SV (2) 88 ja/rn 5/ 8

S.F. 2397 Sec. 10. NEW SECTION . 502.810 Financial exploitation —— 1 reporting —— contingent appropriation. 2 1. The insurance division shall compile and report to the 3 legislative services agency and department of management on an 4 ongoing basis the number of notifications the division receives 5 related to the potential financial exploitation of eligible 6 adults. 7 2. Beginning immediately following the date in a fiscal 8 year in which the number of notifications reported to the 9 legislative services agency and the department of management 10 pursuant to subsection 1 equals or exceeds one hundred 11 twenty-five percent of the number of notifications reported 12 for the fiscal year beginning July 1, 2020, and each fiscal 13 year thereafter, there is appropriated from the department 14 of commerce revolving fund created in section 546.12 to 15 the insurance division seventy-five thousand dollars for 16 the sole and exclusive purpose of investigating complaints 17 and notifications related to financial exploitation of 18 eligible adults. The insurance division shall use the funds 19 appropriated under this subsection for one full-time equivalent 20 position. 21 3. Notwithstanding section 8.33, moneys appropriated in 22 this section that remain unencumbered or unobligated at the 23 close of the fiscal year shall not revert but shall remain 24 available for expenditure for the purposes designated until the 25 close of the succeeding fiscal year. 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill relates to the financial exploitation of persons 30 designated as eligible adults. The bill defines an eligible 31 adult as persons 65 years of age or older and certain dependent 32 adults as defined in Code section 252B.2. 33 The bill permits broker-dealers, investment advisers, 34 and qualified individuals to notify the commissioner of 35 -6- LSB 5358SV (2) 88 ja/rn 6/ 8

S.F. 2397 insurance if they reasonably believe financial exploitation 1 of an eligible adult has occurred, has been attempted, 2 or is being attempted. The bill provides immunity for 3 broker-dealers, investment advisers, and qualified individuals 4 from administrative or civil liability incurred or imposed as 5 a result of this notification or as a result of any failure to 6 alert the eligible adult of the notification. 7 The bill allows broker-dealers, investment advisers, and 8 qualified individuals to notify permissible third parties 9 if they reasonably believe financial exploitation of an 10 eligible adult has occurred, has been attempted, or is 11 being attempted. The bill similarly provides immunity for 12 broker-dealers, investment advisers, and qualified individuals 13 from administrative or civil liability incurred or imposed as 14 a result of this notification. 15 The bill prohibits broker-dealers, investment advisers, 16 and qualified individuals from notifying a permissible third 17 party if the broker-dealer, investment adviser, or qualified 18 individual reasonably suspects the permissible third party of 19 financial exploitation or other abuse of the eligible adult. 20 The bill requires a broker-dealer, investment adviser, 21 or qualified individual to initiate an internal review of a 22 requested disbursement or transaction if the broker-dealer, 23 investment adviser, or qualified individual reasonably believes 24 the disbursement or transaction will likely result in or 25 contribute to the financial exploitation of an eligible adult. 26 The bill allows a broker-dealer or investment adviser 27 to delay a disbursement or transaction from an eligible 28 adult’s account or an account on which an eligible adult is 29 a beneficiary if certain enumerated steps are followed. The 30 bill also prohibits broker-dealers, investment advisers, and 31 qualified individuals from notifying a person authorized 32 to transact business on the eligible adult’s account or an 33 account on which an eligible adult is a beneficiary if the 34 broker-dealer, investment adviser, or qualified individual 35 -7- LSB 5358SV (2) 88 ja/rn 7/ 8

S.F. 2397 reasonably believes the person has committed financial 1 exploitation or other abuse of the eligible adult. 2 The bill establishes when and under what conditions the 3 delay of the disbursement or transaction is to end. The bill 4 provides immunity for broker-dealers and investment advisers 5 from administrative or civil liability incurred or imposed as 6 a result of the delay. 7 The bill requires broker-dealers or investment advisers 8 to provide to qualified individuals training related to 9 identifying financial exploitation of eligible adults and 10 privacy and confidentiality requirements. 11 The bill also requires broker-dealers and investment 12 advisers to provide the commissioner of insurance and law 13 enforcement officers access to and copies of records relevant 14 to investigations of financial exploitation of eligible adults 15 in certain enumerated circumstances. The bill provides these 16 records are considered confidential records for purposes of 17 Code chapter 22, and are not available for examination under 18 Code section 22.2. 19 The bill requires the insurance division of the department 20 of commerce to compile and report to the legislative services 21 agency and department of management the number of notifications 22 the division receives related to the potential financial 23 exploitation of eligible adults. 24 The bill makes a contingent appropriation from the 25 department of commerce revolving fund to the division for 26 purposes of investigating complaints and notifications 27 related to financial exploitation of eligible adults. The 28 appropriation will be made when the number of notifications 29 the division reports to the legislative services agency and 30 department of management related to the potential financial 31 exploitation of eligible adults equals or exceeds 125 percent 32 of the number of notifications reported for the fiscal year 33 beginning July 1, 2020. 34 -8- LSB 5358SV (2) 88 ja/rn 8/ 8