85R8745 EES-D

By: Perez H.B. No. 3224

A BILL TO BE ENTITLED

AN ACT

relating to requiring dealers and investment advisers to report suspected financial abuse of elderly persons; providing a civil penalty; creating a criminal offense.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The Securities Act (Article 581-1 et seq., Vernon's Texas Civil Statutes) is amended by adding Section 45 to read as follows:

Sec. 45. REPORTING OF FINANCIAL ABUSE OF ELDERLY PERSONS. A. In this section:

(1) "Adult protective services division" means the adult protective services division of the Department of Family and Protective Services.

(2) "Elderly person" has the meaning assigned by Section 48.002, Human Resources Code.

(3) "Financial abuse" means the wrongful or negligent taking, appropriation, obtaining, retention, or use of, or assisting in the wrongful or negligent taking, appropriation, obtaining, retention, or use of, money or other property of another person by any means, including by exerting undue influence. The term includes financial exploitation.

(4) "Financial exploitation" means the wrongful or negligent taking, appropriation, obtaining, retention, or use of money or other property of another person by a person who has a relationship of confidence or trust with the other person. Financial exploitation may involve coercion, manipulation, threats, intimidation, misrepresentation, or the exerting of undue influence. The term includes:

(A) the breach of a fiduciary relationship, including the misuse of a durable power of attorney or the abuse of guardianship powers, that results in the unauthorized appropriation, sale, or transfer of another person's property;

(B) the unauthorized taking of personal assets;

(C) the misappropriation, misuse, or unauthorized transfer of another person's money from a personal or a joint account; and

(D) the negligent or intentional failure to effectively use another person's income and assets for the necessities required for the person's support and maintenance.

B. For purposes of Subsection A of this section, a person has a relationship of confidence or trust with another person if the person:

(1) is a parent, spouse, adult child, or other relative by blood or marriage of the other person;

(2) is a joint tenant or tenant-in-common with the other person;

(3) has a legal or fiduciary relationship with the other person;

(4) is a financial planner or investment professional who provides services to the other person; or

(5) is a paid or unpaid caregiver of the other person.

C. Notwithstanding any other law, if an agent or investment adviser representative has a good faith belief that financial abuse of an elderly person has occurred or is occurring, the agent or investment adviser representative shall immediately notify the dealer or investment adviser, as appropriate, for whom the agent or investment adviser representative is providing services.

D. On receiving the notification made under Subsection C of this section or if a dealer or investment adviser has a good faith belief that financial abuse of an elderly person has occurred or is occurring, the dealer or investment adviser, as appropriate, shall:

(1) subject to Subchapter B-1, Chapter 48, Human Resources Code, make a report notifying the adult protective services division of the suspected financial abuse; and

(2) notify the appropriate local law enforcement agency with jurisdiction over the municipality or county in which the elderly person resides of the suspected financial abuse for purposes of investigating and determining whether an offense under Section 32.53, Penal Code, or other law has occurred.

E. The report and notification required by Subsection D of this section must be made:

(1) by telephone or electronic means, not later than 24 hours after the dealer or investment adviser receives notification of suspected financial abuse or believes in good faith that suspected financial abuse occurred or is occurring; and

(2) in writing, not later than the third business day after the date the dealer or investment adviser receives notification of suspected financial abuse or believes in good faith that suspected financial abuse occurred or is occurring.

F. For purposes of Subsection C of this section, a person's good faith belief must be acquired in connection with the provision of services by the person to or on behalf of the elderly person and must be based on:

(1) the person's observation or knowledge of an incident of suspected financial abuse, if the person has direct contact with the elderly person; or

(2) the presence of information indicating potential financial abuse during a review or approval process performed by the person in connection with the provision of services, if the person does not have direct contact with the elderly person but reviews or approves the elderly person's transactions, documents, or records.

G. Nothing in this section shall be construed to require a dealer or investment adviser to investigate an allegation of financial abuse made by an elderly person or other person.

H. Except as provided by Subsection I of this section, the following information is confidential and is not subject to disclosure to the public, except under court order:

(1) the information contained in a report or notification made under Subsection D of this section;

(2) the identity of any informing agent or investment adviser representative under Subsection C of this section or the name of the dealer or investment adviser making the report or notification under Subsection D of this section; and

(3) information provided by or submitted to a dealer or investment adviser in connection with an investigation arising out of a report or notification made under Subsection D of this section.

I. Information that is confidential under Subsection H of this section may be disclosed only:

(1) to the adult protective services division or another state agency, a law enforcement agency, or the attorney general, in connection with the reporting or notification of or an investigation of suspected financial abuse of the elderly person to whom the information pertains;

(2) to, or as authorized by, the elderly person or the guardian of the elderly person, unless the dealer or investment adviser suspects the guardian of financial abuse of the elderly person; or

(3) as part of a civil or criminal action related to the suspected financial abuse of the elderly person.

J. A person commits an offense if the person discloses confidential information in violation of this section. An offense under this subsection is a Class C misdemeanor.

K. A dealer or investment adviser that, or an agent or investment adviser representative who, makes a report or notification in good faith under Subsection C or D of this section is immune from any criminal or civil liability arising from:

(1) the report or notification; or

(2) participation in any judicial proceeding arising from the report or notification.

L. A dealer or investment adviser that fails to make a report or notification in violation of this section is liable to this state for a civil penalty in an amount not to exceed $25,000, unless a court finds the violation to be wilful, in which case the amount of the civil penalty may not exceed $100,000.

M. The attorney general may bring an action on behalf of this state to recover a civil penalty under Subsection L of this section.

N. Subject to Section 48.072, Human Resources Code, the Board and the executive commissioner of the Health and Human Services Commission, after consulting with the Securities Commissioner and the Department of Family and Protective Services, shall jointly adopt rules necessary to implement this section, including rules that require each dealer or investment adviser to implement a training program to:

(1) assist the agents or investment adviser representatives, as appropriate, in recognizing signs of potential financial abuse of an elderly person; and

(2) inform the agents or investment adviser representatives, as appropriate, about the reporting and notification requirements of this section.

SECTION 2. Subchapter A, Chapter 48, Human Resources Code, is amended by adding Section 48.008 to read as follows:

Sec. 48.008. CONSOLIDATION OF CERTAIN REPORTS. If cost-effective and feasible, the executive commissioner by rule may consolidate the form and procedures used to submit a report under Sections 48.051 and 48.072.

SECTION 3. Chapter 48, Human Resources Code, is amended by adding Subchapter B-1 to read as follows:

SUBCHAPTER B-1. FINANCIAL ABUSE OF ELDERLY PERSONS

Sec. 48.071. DEFINITIONS. In this subchapter:

(1) "Dealer" and "investment adviser" have the meanings assigned by Section 4, The Securities Act (Article 581-4, Vernon's Texas Civil Statutes).

(2) "Financial abuse" has the meaning assigned by Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes).

(3) "Securities board" means the State Securities Board.

Sec. 48.072. CERTAIN REPORTS OF SUSPECTED FINANCIAL ABUSE. (a) The executive commissioner, after consultation with the securities board, by rule shall prescribe the form and content of the report required to be made by a dealer or investment adviser under Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes). A report made by a dealer or investment adviser under Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes), constitutes a report of suspected financial abuse of an elderly person for purposes of this subchapter.

(b) In adopting rules under this section, the executive commissioner shall ensure that a report of suspected financial abuse of an elderly person described by Subsection (a) includes to the extent possible the same information required to be included in a report under Section 48.051(d).

(c) A dealer or investment adviser that makes a report to the department of suspected financial abuse of an elderly person under Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes), in accordance with this section is not required to make an additional report of suspected abuse, neglect, or exploitation under Section 48.051 for the same conduct constituting the financial abuse reported under this section.

Sec. 48.073. ASSESSMENT, INVESTIGATION, AND DISPOSITION OF REPORTS. (a) The executive commissioner by rule shall adopt procedures for the assessment, investigation, and disposition of a report of suspected financial abuse of an elderly person received under Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes), that must be similar to the procedures used for the assessment, investigation, and disposition of a report of abuse, neglect, or exploitation received by the department under this chapter, other than a report received under Subchapter F.

(b) The procedures adopted under this section must require:

(1) a risk assessment similar to the assessment required under Section 48.004;

(2) investigations similar to the investigations required under Subchapter D, including requirements that the department:

(A) take action on a report within the time frame and in the manner provided by Section 48.151;

(B) perform an interview with the elderly person similar to the interview required by Section 48.152;

(C) if appropriate, implement a system to investigate complex cases similar to the system implemented under Section 48.1521;

(D) report criminal conduct to appropriate law enforcement agencies similar to the reports under Section 48.1522; and

(E) review certain cases involving multiple reports under Section 48.051 and this subchapter similar to the review performed under Section 48.1523; and

(3) a determination of services similar to the determination required by Section 48.202.

Sec. 48.074. AUTHORITY OF DEPARTMENT OR OTHER AGENCY. The department or another appropriate state agency has the authority to act on or with respect to an allegation of financial abuse of an elderly person under this subchapter to the same extent the department or other agency has the authority to act on or with respect to an allegation of abuse, neglect, or exploitation under Subchapter B.

Sec. 48.075. ACCESS TO INVESTIGATION. (a) To implement an investigation of reported financial abuse of an elderly person, the probate court, as defined by Section 22.007, Estates Code, may authorize entry into the place of residence of an elderly person.

(b) A peace officer shall accompany and assist the person making a court-ordered entry under this section if the court determines that action is necessary.

Sec. 48.076. INTERFERENCE WITH INVESTIGATION OR SERVICES PROHIBITED. (a) Notwithstanding Section 1151.001, Estates Code, a person, including a guardian, may not interfere with:

(1) an investigation by the department or by another protective services agency of suspected financial abuse of an elderly person; or

(2) the provision of protective services to an elderly person.

(b) The department or another protective services agency may petition the appropriate court to enjoin any interference with:

(1) an investigation of suspected financial abuse of an elderly person under this subchapter; or

(2) the provision of protective services, such as removing an elderly person to safer surroundings or safeguarding the elderly person's resources from financial abuse.

Sec. 48.077. MEMORANDUM OF UNDERSTANDING. The commission, the Securities Commissioner, and the department shall enter into a memorandum of understanding regarding the reporting and investigation of suspected financial abuse of an elderly person under this subchapter.

Sec. 48.078. CONFIDENTIALITY. (a) All files, reports, records, communications, and working papers used or developed by the department or other state agency in an investigation made under this subchapter or in providing services as a result of an investigation are confidential and not subject to disclosure under Chapter 552, Government Code.

(b) The department or investigating state agency may establish procedures to exchange with another state agency or governmental entity information that is necessary for the department, state agency, or governmental entity to properly execute its respective duties and responsibilities to provide services to elderly persons under this chapter or other law. An exchange of information under this subsection does not affect whether the information is subject to disclosure under Chapter 552, Government Code.

SECTION 4. Subchapter C, Chapter 48, Human Resources Code, is amended by adding Section 48.104 to read as follows:

Sec. 48.104. NONAPPLICABILITY. (a) This subchapter does not apply to a report of financial abuse of an elderly person made under Subchapter B-1.

(b) The confidentiality of information received or provided by the department in connection with a report of financial abuse of an elderly person made under Subchapter B-1 is governed by Section 48.078 and by Section 45, The Securities Act (Article 581-45, Vernon's Texas Civil Statutes).

SECTION 5. Subchapter D, Chapter 48, Human Resources Code, is amended by adding Section 48.1511 to read as follows:

Sec. 48.1511. NONAPPLICABILITY. This subchapter does not apply to an investigation conducted under Subchapter B-1 unless the executive commissioner by rule requires the application of a provision of this subchapter.

SECTION 6. This Act takes effect September 1, 2017.