AN ACT relating to financial exploitation.

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AN ACT relating to financial exploitation. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 209.990 is amended to read as follows: 3
(1) Any person who [Anyone] knowingly or wantonly violates[violating the provisions 4
of] KRS 209.030(2) shall be guilty of a Class B misdemeanor [ as designated in 5
KRS 532.090]. Each violation shall constitute a separate offense. 6
(2) Any person who knowingly abuses or neglects an adult is guilty of a Class C 7
felony. 8
(3) Any person who wantonly abuses or neglects an adult is guilty of a Class D felony. 9
(4) Any person who recklessly abuses or neglec ts an adult is guilty of a Class A 10
misdemeanor. 11
(5) Any person who knowingly exploits an adult or a person sixty -five (65) years of 12
age or older, resulting in a total loss to the victim[adult] of more than one thousand 13
dollars ($1,000) [three hundred dollars ($300)] in financial or other resources, or 14
both, is guilty of a Class B[Class C] felony. 15
(6) Any person who wantonly or recklessly exploits an adult or a person sixty-five (65) 16
years of age or older , resulting in a total loss to the victim[adult] of more than one 17
thousand dollars ($1,000) [three hundred dollars ($300)] in financial or other 18
resources, or both, is guilty of a Class C[Class D] felony. 19
(7) Any person who knowingly, wantonly, or recklessly exp loits an adult or a person 20
sixty-five (65) years of age or older , resulting in a total loss to the victim[adult] of 21
one thousand dollars ($1,000) [three hundred dollars ($300)] or less in financial or 22
other resources, or both, is guilty of a Class A misdemeanor. 23
(8) If a defendant is sentenced under subsection (5), (6), or (7) of this section and fails 24
to return the victim's property as defined in KRS 218A.405 within thirty (30) days 25
of an order by the sentencing court to return the property [do so], or is th irty (30) 26
days or more delinquent in a court -ordered payment schedule, then the defendant 27
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shall be civilly liable to the victim of the offense or the victim's estate for treble 1
damages, plus reasonable attorney's[attorney] fees and court costs. Any interes ted 2
person or entity, as defined in KRS 387.510, shall have standing to bring a civil 3
action on the victim's behalf to enforce this section. The sentencing judge shall 4
inform the defendant of the provisions of this subsection at sentencing. 5
(9) Notwithstanding KRS 440.200, the Attorney General may demand from the 6
Governor of any other state the surrender of any person found in the other state 7
who is charged in Kentucky with a crime under subsection (5), (6), or (7) of this 8
section, even if the person was no t in Kentucky at the time of the commission of 9
the crime. The demand, oath, or any proceedings for extradition pursuant to this 10
section are not required to state or show that the person whose surrender is 11
demanded has fled from justice, or at the time of the commission of the crime was 12
in Kentucky or the other state. 13
Section 2. KRS 292.338 is amended to read as follows: 14
(1) As used in this section: 15
(a) "Approved IAR continuing education content" means the materials, writt en, 16
oral, or otherwise: 17
1. That have been approved by NASAA or its designee; and 18
2. Which make up the educational program provided to an investment 19
adviser representative under this section; 20
(b) "Authorized provider" means a person that NASAA or its design ee has 21
authorized to provide continuing education content required by this section; 22
(c) "Credit" means a unit that has been designated by NASAA or its designee as 23
at least fifty (50) minutes of educational instruction; 24
(d) "Ethics and professional responsi bility content" means approved IAR 25
continuing education content that addresses an investment adviser 26
representative's ethical and regulatory obligations; 27
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(e) "FINRA" means the Financial Industry Regulatory Authority; 1
(f) "Home state" means a state, other t han Kentucky, in which the investment 2
adviser representative has his or her principal office and place of business; 3
(g) "NASAA" means the North American Securities Administrators Association 4
or a committee designated by its board of directors; 5
(h) "Products and practice content" means approved IAR continuing education 6
content that addresses an investment adviser representative's continuing skills 7
and knowledge regarding financial products, investment features, and 8
practices in the investment advisory industry; and 9
(i) 1. "Reporting period" means one (1) twelve (12) month period as 10
determined by NASAA. 11
2. An investment adviser representative's initial reporting period 12
commences the first day of the first full reporting period after the 13
individual is registered, or required to be registered, under this chapter. 14
(2) Except as otherwise provided in this section, every registered investment adviser 15
representative shall complete the following continuing education requirements each 16
reporting period: 17
(a) Six (6) cred its of ethics and professional responsibility content offered by an 18
authorized provider, with at least three (3) hours covering the topic of ethics; 19
and 20
(b) Six (6) credits of products and practice content offered by an authorized 21
provider. 22
(3) An investme nt adviser representative shall be considered in compliance with 23
subsection (2)(b) of this section for each applicable reporting period if: 24
(a) The investment adviser representative: 25
1. Is also registered as an agent of a FINRA-member broker-dealer; and 26
2 Complies with FINRA's continuing education requirements; and 27
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(b) FINRA's continuing education content meets all of the following baseline 1
criteria, as determined by NASAA: 2
1. The content focuses on compliance, regulatory, ethical, and sales 3
practices standards; 4
2. The content is derived from: 5
a. State and federal investment advisory statutes, rules, and 6
regulations; 7
b. Securities industry rules and regulations; or 8
c. Accepted standards and practices in the financial services industry; 9
and 10
3. The content re quires that its participants demonstrate proficiency in the 11
subject matter of the educational materials. 12
(4) Continuing education credits completed by an investment adviser representative 13
shall be considered to comply with subsection (2) of this section for each applicable 14
reporting period if: 15
(a) The investment adviser representative: 16
1. Is not required to pass a written examination by administrative 17
regulation or order promulgated pursuant to KRS 292.331(3); 18
2. Completes continuing education credits neces sary for maintaining, and 19
remaining in good standing to hold, a professional designation identified 20
by the commissioner by administrative regulation or order; and 21
3. Is required to complete continuing education credits to maintain, and 22
remain in good stand ing to hold, the professional designation identified 23
by the commissioner by administrative regulation or order; and 24
(b) The continuing education content provided by the credentialing organization 25
for the professional designation identified by the commissio ner by 26
administrative regulation or order is approved IAR continuing education 27
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content. 1
(5) An investment adviser representative registered or required to be registered in 2
Kentucky who is registered as an investment adviser representative in the 3
individual's home state shall be considered in compliance with subsection (2) of 4
this section if: 5
(a) The investment adviser representative's home state has continuing education 6
requirements that are at least as stringent as the NASAA Model Rule on 7
Investment Adviser Representative Continuing Education; and 8
(b) The investment adviser representative is in compliance with the home state's 9
investment adviser representative continuing education requirements. 10
(6) (a) In addition to the requirements of subsection (2) of th is section, a registered 11
investment adviser representative shall complete at least three (3) hours of 12
continuing education covering the topic of financial exploitation for each 13
reporting period, which may include firm-specific policies and procedures. 14
(b) The continuing education required under paragraph (a) of this subsection 15
may be part of the twelve (12) hours required under subsection (2) of this 16
section if the financial exploitation content: 17
1. Is approved IAR continuing education content offered by an 18
authorized provider; or 19
2. Otherwise meets the requirements of subsection (3), (4), or (5) for 20
compliance with subsection (2) of this section. 21
(7) Every investment adviser representative shall be responsible for ensuring that: 22
(a) The authorized provider reports the investment adviser representative's 23
completion of the approved IAR continuing education content; and 24
(b) Any continuing education required under subsection (6) of this section that 25
is not provided by an authorized provider is reported. 26
(8)[(7)] An investment adviser representative who completes continuing education 27
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credits in excess of the amount required for the reporting period may not carry 1
forward excess credits to a subsequent reporting period. 2
(9)[(8)] (a) An investment adviser representative who fails to comply with this 3
section by the end of a reporting period shall: 4
1. Be subject to registration renewal as "CE inactive" at the close of the 5
calendar year in Kentucky; and 6
2. Remain "CE inactive" until the i nvestment adviser representative 7
completes and reports all required continuing education credits for all 8
reporting periods as required by this section. 9
(b) An investment adviser representative who is "CE inactive" at the close of the 10
next calendar year shall not be eligible for: 11
1. Investment adviser representative registration; or 12
2. Renewal of investment adviser representative registration. 13
(10)[(9)] A person who was previously registered under this chapter as an investment 14
adviser representative and beca me unregistered shall complete all[approved IAR] 15
continuing education content for all reporting periods that occurred between the 16
time that the investment adviser representative became unregistered and the time 17
the person became registered again under this chapter unless the investment adviser 18
representative makes a subsequent application for registration and complies with 19
any examination requirement under KRS 292.331(3). 20
(11)[(10)] The commissioner may, in his or her discretion, waive any requirements of 21
this section except subsection (6) of this section. 22
Section 3. KRS 365.245 is amended to read as follows: 23
(1) As used in this section: 24
(a) "Authorized agencies" means the Cabinet for Health and Family Services and 25
the Department of Financial Institutions; 26
(b) "Financial exploitation" means: 27
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1. The wrongful or unauthorized taking, withholding, appropriation, or use 1
of a specified adult's money, assets, or property[funds or securities]; or 2
2. Any act or omission by a person, including through the use of a power 3
of attorney, guardianship, or any other authority regarding a specified 4
adult, to: 5
a. Obtain control, through deception, intimidation, or undue 6
influence, over a specified adult's money, assets, or property; or 7
b. Convert a specified adult's money, assets, or property; 8
(c) "Financial institution" means any person doing business under the laws of any 9
state or commonwealth or the United States relating to banks, bank holding 10
companies, savings banks, savings and loan asso ciations, trust companies, or 11
credit unions; 12
(d) "Qualified person" means a: 13
1. Broker-dealer as defined in KRS 292.310; 14
2. Investment adviser as defined in KRS 292.310; or 15
3. Financial institution; and 16
(e) "Specified adult" means: 17
1. A natural person age sixty-five (65) or older; or 18
2. A natural person age eighteen (18) or older who a qualified person 19
reasonably believes has a mental or physical impairment that renders 20
that natural person unable to protect his or her own interests. A qualified 21
person's re asonable belief may be based on facts and circumstances 22
observed in the qualified person's business relationship with the natural 23
person. 24
(2) (a) If a qualified person reasonably believes that financial exploitation has 25
occurred, is occurring, has been att empted, or will be attempted, the qualified 26
person may notify the following: 27
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1. Authorized agencies; and 1
2. Any third party that is: 2
a. Reasonably associated with the specified adult; or 3
b. Otherwise permitted by law. 4
(b) Any report or disclosure made to authorized agencies pursuant to this 5
subsection shall be confidential and shall not be subject to disclosure pursuant 6
to the Kentucky Open Records Act, KRS 61.870 to 61.884. The name of the 7
notifying qualified person shall not be revealed to any person outside of the 8
authorized agencies without the permission of the notifying qualified person. 9
(3) (a) Subject to subsection (5) of this section, a qualified person may place a 10
temporary hold on a transaction[ on] or[ a] disbursement from an account of a 11
specified adult, or an account on which a specified adult is a beneficiary, if: 12
1. The qualified person fulfills any reporting obligations under KRS 13
209.030[. Nothing in this subsection shall be read to expand any of the 14
requirements of KRS 209.030]; 15
2. The qualified person reasonably believes that financial exploitation of a 16
specified adult has occurred, is occurring, has been attempted, or will be 17
attempted;[ and] 18
3. Not later than two (2) business days after the date the tempor ary hold 19
was first placed[,] the qualified person: 20
a. Provides oral or written notification, which may be electronic, of 21
the temporary hold and the reason for the temporary hold [ is 22
made] to: 23
i.[a.] All parties authorized to transact business on the accoun t; 24
and 25
ii.[b.] Any person age eighteen (18) or older authorized by the 26
specified adult or their legal representative, in writing, to be 27
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contacted about the specified adult's account; and 1
b. Creates and maintains, for at least five (5) years from the date 2
the temporary hold was first placed, a written or electronic 3
record of the temporary hold that, at a minimum, includes the 4
following information: 5
i. The date the temporary hold was first placed; 6
ii. The name and address of the specified adult; 7
iii. The business location of the qualified person; 8
iv. The name and title of the employee who placed the 9
temporary hold; and 10
v. The facts and circumstances that caused the employee to 11
place the temporary hold. 12
(b) 1. Unless otherwise provided in subparagraph 2. of thi s paragraph, any 13
temporary hold authorized by this subsection shall expire upon the 14
sooner of: 15
a. A determination by the qualified person that the disbursement or 16
transaction will not result in financial exploitation of the specified 17
adult; or 18
b. Not later than fifteen (15) business days after the date the qualified 19
person first placed the temporary hold, unless the qualified 20
person's internal review of the facts and circumstances supports its 21
reasonable belief that financial exploitation of the specified a dult 22
has occurred, is occurring, has been attempted, or will be 23
attempted, in which case the qualified person may extend the 24
expiration to not later than twenty-five (25) business days after the 25
date the qualified person first placed the temporary hold. 26
2. At any time, an agency of competent jurisdiction, including but not 27
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limited to the authorized agencies, or a court of competent jurisdiction 1
may terminate or extend a temporary hold authorized by this subsection. 2
(4) Notwithstanding subsection (2) or (3) of this section, a notification permitted or 3
required by this section shall not be made to any person who is suspected of 4
financial exploitation or other abuse. 5
(5) Before placing a temporary hold on a transaction or disbursement under this 6
section, a qualified person shall: 7
(a) Develop training policies or programs reasonably designed to educate 8
employees who perform or approve transactions or disbursements on behalf 9
of customers on issues pertaining to the financial exploitation of specified 10
adults; 11
(b) Conduct the training required under paragraph (a) of this subsection: 12
1. For employees who became employed by the qualified person before 13
the effective date of this Act, as soon as reasonably practicable; and 14
2. For employees who become employed by the qualified person on or 15
after the effective date of this Act, as soon as reasonably practicable 16
but not later than one (1) year after the date the employee became 17
employed by the qualified person; and 18
(c) Develop, maintain, and enforce written procedures regarding the manner in 19
which suspected financial exploitation is reviewed internally, including, if 20
applicable, the manner in which the suspected financial exploitation is 21
required to be reported to supervisory personnel. 22
(6) (a) A qualified person shall provide access to or copies o f records that are 23
relevant to the suspected or attempted financial exploitation of a specified 24
adult to agencies charged with administering state adult protective services 25
laws and to law enforcement, either: 26
1. As part of a referral to the agency or[ to] law enforcement;[,] or 27
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2. Upon request of the agency or law enforcement pursuant to an 1
investigation. 2
(b) The records that are provided to agencies or law enforcement pursuant to 3
this subsection may include: 4
1. Historical records; and[ as well as] 5
2. Records relating to: 6
a. The most recent disbursements; or 7
b. Disbursements that may comprise financial exploitation of a 8
specified adult. 9
(c) All records made available to agencies pursuant to this subsection shall be 10
confidential and shal l not be subject to disclosure pursuant to the Kentucky 11
Open Records Act, KRS 61.870 to 61.884. 12
(d) [Nothing in ]This subsection shall not limit or otherwise impede the authority 13
of the commissioner of the Department of Financial Institutions to access or 14
examine the books and records of a qualified person as otherwise provided by 15
law. 16
(7)[(6)] Notwithstanding any provision of law to the contrary, the authorized agencies 17
may disclose to any notifying qualified person the general status or final disposition 18
of any investigation that arose from a report made by the qualified person. 19
(8)[(7)] A qualified person that exercises good faith in making disclosures, placing a 20
temporary hold, or providing access to records pursuant to this section shall be 21
immune from any administrative or civil liability that might otherwise arise from 22
such activities. 23
(9)[(8)] This section shall not be construed to expand any of the requirements of 24
KRS 209.030. 25
(10) This section may be cited as the "Protection from Financial Exploitation Act." 26