Bill Text: WV SB418 | 2024 | Regular Session | Introduced
Bill Title: Authorizing restitution to victims of securities fraud
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2024-01-12 - To Judiciary [SB418 Detail]
Download: West_Virginia-2024-SB418-Introduced.html
FISCAL NOTE
2024 REGULAR SESSION
Introduced
Senate Bill 418
By Senator Oliverio
[Introduced January 12, 2024; referred
to the Committee on the Judiciary; and then to the Committee on Finance]
A BILL to amend and reenact §32-4-406 and §32-4-407a of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto 12 new sections, designated §32-7-701, §32-7-702, §32-7-703, §32-7-704, §32-7-705, §32-7-706, §32-7-707, §32-7-708, §32-7-709, §32-7-710, §32-7-711, and §32-7-712, all relating to authorizing victim restitution and creating a restitution assistance fund for victims of securities violations; providing a short title; providing definitions; creating the Securities Restitution Operating Fund; providing for the manner and procedures for applications for restitution assistance; providing the manner and procedures for the payment of restitution assistance awards; detailing the situations in which restitution is prohibited; providing for subrogation; providing for a lien on recovery and refunds of excessive restitution amounts; providing for the suspension of claims; exempting the restitution awards from attachment or intercept; authorizing the Auditor to promulgate rules regarding the restitution program; providing an effective date; permitting the Auditor to transfer three percent of securities fees collected to the Securities Restitution Operating Fund; and authorizing the awarding of restitution in an administrative assessment.
Be it enacted by the Legislature of West Virginia:
ARTICLE 4. GENERAL PROVISIONS.
§32-4-406. Administration of chapter; operating fund for securities department.
(a) This chapter shall be administered by the Auditor of this state and he or she is hereby designated, and shall be, the commissioner of securities of this state. He or she has the power and authority to appoint or employ such assistants as are necessary for the administration of this chapter.
(b) The Auditor shall set up a special operating fund for the securities division in his or her office. The Auditor shall pay into the fund 20 percent of all fees collected as provided for in this chapter. If, at the end of any fiscal year, the balance in the special operating fund exceeds 20 percent of the gross revenues from the special operating fund operations, the excess shall be transferred to the General Revenue Fund. The special operating fund shall be used by the Auditor to fund the operation of the securities division and the general operations of the Auditor’s office. The special operating fund shall be appropriated by line item by the Legislature.
(c) Moneys payable for assessments established by §32-4-407a of this code shall be collected by the commissioner and deposited into the General Revenue Fund.
(d) In each given fiscal year, up to three percent of all collected gross assessments and fees may be deposited to the Securities Restitution Assistance Fund created in §32-7-703 of this code.
(d) (e) It is unlawful for the commissioner or any of his or her officers or employees to use for personal benefit any information which is filed with or obtained by the commissioner and which is not made public. No provision of this chapter authorizes the commissioner or any of his or her officers or employees to disclose any information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of the chapter either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the commissioner or any of his or her officers or employees.
§32-4-407a. Administrative assessments.
(a) A registrant, applicant for registration, issuer, or other person upon whom the commissioner has conducted an examination, audit, investigation, or prosecution and who has been determined by the commissioner to have violated this article or rule or order of the commissioner under this article shall pay for all the costs incurred in the conduct of such examination, audit, investigation, or prosecution. These costs shall include, but not be limited to, the salaries and other compensation paid to clerical, accounting, administrative, investigative, examiner and legal personnel, the actual amount of expenses reasonably incurred by such personnel and the commissioner in the conduct of such examination, audit, investigation, or prosecution, including a pro rata portion of the commissioner's administrative expense.
(b) After giving notice and opportunity for a hearing, the commissioner may issue an order accompanied by written findings of fact and conclusions of law which imposes victim restitution pursuant to the provisions of §32-7-701, et seq. of this code and may issue an order accompanied by written findings of fact which imposes an administrative assessment in an amount provided in subdivision (1) against a broker-dealer, agent, investment adviser or investment adviser representative registered under §32-2-201, et seq., of this code or an affiliate of the broker-dealer or investment adviser where the commissioner finds that the person either willfully has violated this article or a rule or order of the commissioner under this article or has engaged in dishonest or unethical practices in the securities business or has taken unfair advantage of a customer.
(1) The commissioner, in issuing an order under this subsection may impose an administrative assessment of up to $10,000 for a single violation or of up to $50,000 for multiple violations in a single proceeding or a series of related proceedings. Each act or omission that provides a basis for issuing an order under this subsection shall constitute a separate violation.
(2) For purposes of determining the amount of administrative assessment to be imposed in an order issued under this subsection, the commissioner shall consider:
(i) The circumstances, nature, frequency, seriousness, magnitude, persistence, and willfulness of the conduct constituting the violation;
(ii) The scope of the violation, including the number of persons in and out of this state affected by the conduct constituting the violation;
(iii) The amount of restitution or compensation that the violator has made and the number of persons in this state to whom the restitution or compensation has been made;
(iv) Past and concurrent conduct of the violator that has given rise to any sanctions or judgment imposed by, or plea of guilty or nolo contendere or settlement with, the commissioner or any securities administrator of any other state or other country, any court of competent jurisdiction, the Securities and Exchange Commissioner, the Commodity Futures Trading Commission, any other federal or state agency or any national securities association or national securities exchange as defined in the Securities Exchange Act of 1934 (48 Stat. 88a, 15 U.S.C. 78A et seq.);
(v) Any other factor that the commissioner finds appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this article.
(3) An administrative assessment imposed by an order issued under this subsection is not mutually exclusive of any other remedy available under this article.
(4) The commissioner shall not impose an administrative assessment with respect to any public proceeding which was instituted prior to the date of enactment of this section.
ARTICLE 7. Restitution assistance fund for victims of securities violations.
§32-7-701. Short Title.
This article may be cited as the "Securities Violations Restitution Assistance Act".
§32-7-702. Definitions.
As used in this article, unless the context otherwise requires, the following terms have the following meanings:
(a) "Claimant" means a natural person who is a victim that files an application for restitution assistance under this article. "Claimant" includes the named party in a restitution award in a final order, the executor of a named party in a restitution award in a final order, the heirs and assigns of a named party in a restitution award in a final order, or any other person with lawful authority to act for or on behalf of the named party in a restitution award in a final order.
(b) "Final order" means a final order issued by the West Virginia securities commissioner under this chapter which is no longer subject to appeal pursuant to §32-4-411 of this code or a final order issued by a court of competent jurisdiction that is not subject to further judicial review or appeal.
(c) "Fund" means the Securities Restitution Operating Fund established by this article.
(d) "Securities violation" means a violation of this chapter and any related rules or orders.
(e) "Victim" means a person awarded restitution in a final order.
(f) "Vulnerable person" means an individual 65 years of age or older or a person subject to §9-6-1 et seq. of this code.
§32-7-703. Operating fund for restitution program.
There is created in the State Treasury the Securities Restitution Operating Fund. The securities restitution fund shall be used to provide funds for restitution assistance for victims that were awarded restitution in a final order issued by the commissioner or were awarded restitution in a final order of a court of competent jurisdiction for a violation of this chapter and have not received the full amount of restitution ordered before the application for restitution assistance is due. The Auditor may use the Securities Restitution Operating Fund for the administration and operation of the restitution program.
§32-7-704. Application for restitution assistance.
(a) Only victims who are natural persons and residents of the State of West Virginia at the time of the securities violation are eligible for restitution assistance:
(b) The application for restitution assistance under this article must be received by the commissioner not more than one year after the date of the final order awarding restitution to the victim.
(c) Notwithstanding §32-7-704 of this code, the commissioner may grant an extension of time for submission of an application for restitution assistance for good cause shown by the claimant.
(d) A person that is eligible to apply for restitution assistance under this article may submit an application in a manner and form prescribed by the commissioner.
§32-7-705. Restitution assistance awards.
(a) The commissioner may award restitution assistance to a claimant in an amount that is:
(1) The lesser of $25,000 or 25 percent of the amount of unpaid restitution awarded in the final order; or
(2) The lesser of $50,000 or 50 percent of the amount of unpaid restitution awarded in the final order if the victim is a vulnerable person.
(b) An award of restitution assistance under this article may be made only to one claimant per victim.
§32-7-706. Restitution prohibited.
The commission may not award restitution assistance the victim participated in or committed a securities violation, including, but limited to:
(1) Participating or assisting in a securities violation;
(2) Attempting to commit or committing a securities violation; or
(3) The victim profited or would have profited from a securities violation.
§32-7-707. Subrogation.
The commissioner is subrogated to the rights of the claimant awarded restitution assistance under this article to the extent of the restitution assistance award made. The subrogation rights are against the person ordered to pay restitution to the victim for the securities violation.
§32-7-708. Lien on recovery and refund of excess amount.
The commissioner is entitled to a lien in the amount of the restitution assistance award on any recovery made by or on behalf of the victim in a separate action or settlement. A claimant must refund to the commissioner any amount of restitution received that when combined with the restitution assistance exceeds the restitution award in the final order and such amounts shall be deposited in the fund created in §32-7-703 of this code.
§32-7-709. Suspension of claims.
If payment of restitution assistance would result in the Securities Restitution Operating Fund balance falling below $250,000, the commissioner may suspend payment of claims or prorate payment of claims at the commissioner's discretion until such time as the commissioner determines a sufficient balance has been restored to the fund.
§32-7-710. Other process.
A restitution assistance award made by the commissioner under this article is not subject to execution, attachment, garnishment, or other process, except those executions, attachments, garnishments, or other processes brought by or on behalf of the State of West Virginia.
§32-7-711. Rulemaking.
The commissioner may in his or her discretion adopt rules, orders, or forms it deems necessary to carry out the purposes of this article pursuant to the authority granted in §32-4-412 of this code.
§32-7-712. Effective date.
Restitution assistance awards may be made under this article to victims awarded restitution in a final order issued on or after the effective date of this article.
NOTE: The purpose of this bill is to authorize restitution to victims of securities fraud and to create a fund for that purpose.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
