Citations Affected: IC 23-19-6-1; IC 23-20.
Synopsis: Restitution for victims of securities violations. Establishes
the securities restitution fund to provide restitution assistance to
victims and certain family members of victims for monetary injuries
from securities violations. Provides that the fund consists of amounts:
(1) from certain funds received for deposit in the securities division
enforcement account; and (2) appropriations from the general
assembly. Requires the securities division to: (1) prescribe forms for
processing applications for restitution assistance; and (2) determine
whether a claim for restitution assistance should be awarded.
Establishes requirements for and limitations on awarding restitution
assistance to victims of securities violations. Requires ten percent of
funds received after June 30, 2010, for deposit in the securities division
enforcement account to be deposited into the securities restitution fund.
Continually appropriates money from the securities restitution fund to
the division for the purposes of: (1) awarding restitution assistance
under this chapter; and (2) paying expenses incurred in administering
this chapter. Transfers $2,000,000 from the securities division
enforcement account to the securities restitution fund on July 1, 2010.
Makes it a Class C felony for a person to make or cause to be made: (1)
in any document filed with the securities commissioner or securities
division; or (2) in any proceeding, investigation, or examination; under
the restitution assistance for victims of a securities violations
provisions any statement that is, at the time and in the light of the
circumstances under which it is made, false or misleading in any
material respect.
Effective: July 1, 2010.
January 12, 2010, read first time and referred to Committee on Judiciary.
A BILL FOR AN ACT to amend the Indiana Code concerning
business and other associations and to make an appropriation.
reliable broker-dealers, investment advisers, and agents engaged
in and in connection with the issuance, barter, sale, purchase,
transfer, or disposition of securities in this state.
It is the intent and purpose of this article to delegate and grant to and
vest in the secretary of state, the securities division, and the
commissioner full and complete power to carry into effect and
accomplish the purpose of this article and to charge them with full and
complete responsibility for its effective administration.
(k) Copies of any statement and documents filed in the office of the
secretary of state and of any records of the secretary of state certified
by the commissioner shall be admissible in any prosecution, action,
suit, or proceeding based upon, arising out of, or under this article to
the same effect as the original of such statement, document, or record
would be if actually produced.
(l) IC 4-21.5 is not applicable to any of the proceedings under this
article.
violation committed:
(A) in Indiana; or
(B) in a jurisdiction other than Indiana, including a foreign
country, if the jurisdiction in which the securities violation
occurred does not offer assistance to a victim of a securities
violation that is substantially similar to the assistance
offered under this chapter.
(2) A nonresident of Indiana who is a victim of a securities
violation committed in Indiana.
(3) A surviving spouse or dependent child of a victim
described in subdivision (1) or (2).
(4) Any other person legally dependent for principal support
upon a victim described in subdivision (1) or (2).
Sec. 13. (a) A person eligible for restitution assistance under
section 12 of this chapter may file an application for restitution
assistance with the division.
(b) The application must be received by the division not more
than one hundred eighty (180) days after the date of the order or
award described in section 18 of this chapter. The division may
grant an extension of time for good cause shown by the claimant.
However, the division may not accept an application that is
received more than two (2) years after the date of the order or
award described in section 18 of this chapter.
(c) The application must be filed in the office of the division in
person, through the division's web site, or by first class or certified
mail. If requested, the division shall assist a victim in preparing the
application.
(d) The division shall accept all applications filed in compliance
with this chapter. Upon receipt of a complete application, the
division shall promptly begin the processing of an application.
Sec. 14. (a) The division shall review all applications to ensure
that the applications are complete.
(b) If an application is not complete, the application shall be
returned to the applicant with a brief statement of the additional
information required.
(c) The applicant may, not more than thirty (30) days after
receipt of the request for additional information, either supply the
information or appeal to the securities commissioner.
(d) The decision of the securities commissioner is final.
(e) The division shall deny the application if:
(1) the applicant does not furnish additional information; or
(2) additional time is not granted by the securities
commissioner for good cause.
Sec. 15. (a) Subject to subsection (b), the division may not award
restitution assistance if the victim:
(1) sustained the monetary injury as a result of:
(A) participating or assisting in; or
(B) attempting to commit or committing;
a securities violation; or
(2) profited or would have profited from the securities
violation.
(b) If the victim is a dependent child or dependent parent of the
person who commits a securities violation, restitution assistance
may be awarded where justice requires.
Sec. 16. The division may not award restitution assistance under
this chapter to more than one (1) claimant per victim.
Sec. 17. The division may not award restitution assistance to a
claimant eligible under section 12 of this chapter if the victim or
claimant had a net worth of greater than five hundred thousand
dollars ($500,000) at the time of suffering monetary injury from a
securities violation.
Sec. 18. (a) The division may not award restitution assistance
under this chapter unless the securities violation was adjudicated
in a state or federal court, an FINRA arbitration proceeding, or a
regulatory agency administrative proceeding.
(b) The division may not award restitution assistance under this
chapter unless:
(1) a final order or award has been entered ordering
restitution to the victim in a proceeding described in
subsection (a); and
(2) the party ordered to pay restitution has not paid the full
amount.
Sec. 19. The division shall deny an award of restitution
assistance under this chapter if a court or administrative order or
an arbitration award does not contain an award of restitution to
the victim.
Sec. 20. (a) The division may not award restitution assistance
under this chapter to a claimant whose award of restitution under
a court or administration order or an arbitration award is
overturned on appeal.
(b) If:
(1) a claimant is awarded restitution assistance under this
chapter; and
(2) after receiving an award of restitution assistance under
this chapter, the claimant's award of restitution under a court
or administrative order or an arbitration award is overturned
on appeal;
the claimant shall forfeit the restitution assistance received under
this chapter.
Sec. 21. (a) The state is subrogated to the rights of the victim
awarded restitution to the extent of the award.
(b) The subrogation rights are against the person who
committed the securities violation or a person liable for the
pecuniary loss.
Sec. 22. (a) In addition to the subrogation rights under section
21 of this chapter, the state is entitled to a lien in the amount of the
award on a recovery made by or on behalf of the victim.
(b) The state may:
(1) recover the amount under subsection (a) in a separate
action; or
(2) intervene in an action brought by or on behalf of the
victim.
(c) If a claimant brings an action, the claimant may deduct from
the money owed to the state under the lien the state's pro rata
share of the reasonable expenses for the court suit, including
attorney's fees. The amount the claimant deducts under this
subsection for the state's pro rata share of the expenses may not be
more than fifteen percent (15%) of the money owed under the lien.
Sec. 23. If:
(1) an award is made under this chapter; and
(2) a claimant receives a sum required to be deducted under
section 22 of this chapter;
the claimant shall refund to the state the amount of overpayment.
Sec. 24. (a) In determining the amount of restitution assistance
to award under this chapter, the division shall determine whether
a victim contributed to the infliction of the victim's monetary
injury.
(b) If the division finds that the victim contributed to the
infliction of the victim's monetary injury, the division may deny an
award of restitution assistance.
Sec. 25. An award to a claimant under this chapter may not
exceed the lesser of the following:
(1) Fifteen thousand dollars ($15,000).
(2) Twenty-five percent (25%) of the amount of out-of-pocket
loss.
Sec. 26. An award made by the division to a claimant is not
subject to execution, attachment, garnishment, or other process.
Sec. 27. (a) The securities restitution fund is established.
(b) The fund consists of amounts:
(1) from funds received for deposit in the securities division
enforcement account as provided in IC 23-19-6-1(f); and
(2) appropriated from the general assembly.
Sec. 28. The money in the fund is continually appropriated to
the division for purposes of:
(1) awarding restitution assistance under this chapter; and
(2) paying expenses incurred in administering this chapter.
Sec. 29. Money in the fund and income derived from money in
the fund do not revert to the state general fund at the end of a state
fiscal year.
Sec. 30. (a) If the fund would be reduced below two hundred
fifty thousand dollars ($250,000) by payment in full of all awards
that become final in a month, the division shall suspend payment
of the claims that become final during the month and the following
two (2) months.
(b) At the end of the suspension period the division shall pay the
suspended claims. If the fund would be exhausted by payment in
full of the suspended claims, the amount paid to each claimant shall
be prorated.
Sec. 31. The state is not liable for a written determination made
by the division under this chapter except to the extent that money
is available in the fund on the date the award is computed by the
division under this chapter.
Sec. 32. (a) A claimant convicted of forgery, fraud, or deception
in connection with a claim under this chapter forfeits an award
paid to the claimant under this chapter.
(b) The division may file a civil action to recover funds against
a claimant described in subsection (a).
Sec. 33. A person commits a Class C felony if the person
knowingly makes or causes to be made:
(1) in any document filed with or sent to the securities
commissioner or the division; or
(2) in any proceeding, investigation, or examination;
under this chapter any statement that is, at the time and in the light
of the circumstances under which it is made, false or misleading in
any material respect.
Sec. 34. The division may adopt rules under IC 4-22-2 to
implement this chapter.
($2,000,000) shall be transferred from the securities division
enforcement account established under IC 23-19-6-1 to the
securities restitution fund established by IC 23-20-1-27, as added
by this act, on July 1, 2010.
(b) This SECTION expires July 2, 2010.