State Regulators Propose Restitution for Victims of Securities Fraud
According to the North American Securities Administrators Association (NASAA), the organization announced today that its Board of Directors has approved the release for public comment of a proposed model act to assist states in creating a restitution assistance fund for victims of securities law violations.
The legislation was reportedly designed to provide financial assistance to victims of securities law violations who were awarded restitution but didn’t receive full payment.
According to the press release, the model act would “establish a state securities restitution assistance fund, outline eligibility requirements for victims seeking restitution assistance, set payment caps on the amount of restitution assistance awards, prohibit and forfeit awards in certain circumstances, and provide for recovery mechanisms,” among other things.
The model provides that restitution assistance awards are capped at the lesser of $25,000 or 25% of the amount of unpaid restitution awarded, or the lesser of $50,000 or 50%, if the victim is a vulnerable person, subject to waivers for good cause.
Indiana and Montana reportedly enacted this type of legislation nearly a decade ago and have reported that their restitution assistance programs are successful. Vermont, Kansas and Maine have similar legislation, according to the organization.
Indiana was reportedly the first state to establish a restitution fund. Since the inception of its fund in 2010, Indiana has paid approximately $1 million in restitution assistance awards to 102 claimants. Montana, which established its fund in 2011, has paid $1.6 million to 118 claimants. The average amount of the awards was $10,000 in Indiana and $13,631 in Montana. The average recipient was 64 years old in Indiana, and 82% of recipients were over 60 years old in Montana, according to the press release.
The intention of the legislation is reportedly to give state securities regulators the ability to provide greater financial relief to victims, which is “particularly important to seniors and other vulnerable adults living on a fixed income,” according to the NASAA.
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