Lawmakers and experts press for limited transaction pauses and restored surveillance as scams surge

Lawmakers used a House subcommittee hearing on capital markets fraud to probe specific policy fixes: temporary holds for suspicious transactions, expanded information sharing, and restoration of surveillance data.

Several witnesses and members repeatedly endorsed narrowly tailored pause authorities—described in testimony as "speed bumps"—that would give brokers or funds time to ask questions and confirm whether a transaction is fraudulent. "It's a bit of putting that speed bump in place so people can make rational decisions," Brian Smith (FINRA) said.

AARP's Jolene Gunther told members a randomized field study involving about 200 financial institutions found that the most effective intervention to stop money leaving accounts was the ability to pause suspicious transactions and use trusted contacts to verify intent. "That gives both the mutual fund, institutions the ability to ask those suspicious questions," Gunther said.

Professor Andrew Verstien highlighted limitations in enforcement when historical surveillance data are unavailable or reduced. He urged Congress to ensure the SEC has the staff and data needed to investigate suspicious concentrated trades and to restore any cutbacks to the consolidated audit trail.

Members discussed several legislative and regulatory vehicles raised during testimony, including HR 2478, proposed FINRA rule 21‑66, and broader bills such as the TRAP Act and Guard Act described by members as proposals to strengthen coordination and tracing capabilities. No bill votes occurred at the hearing; members requested additional written responses and evidence.

The hearing underscored a consensus that detection is improving but the legal and operational framework for safe, proactive intervention is lagging. Several members asked for clearer liability protections so firms can act on validated signals without being second‑guessed.