Securities Restitution Fund will be first of its kind for Indiana and the nation

March 18, 2010

Program designed to help defrauded Hoosier investors is nation’s first

INDIANAPOLIS – Indiana Secretary of State Todd Rokita praised the Indiana General Assembly for passing into law his office's suggestion for how to creatively leverage fines and settlements collected from law violators. House Bill 1332, an innovative law passed in the final hours of the 2010 session, will establish a Securities Restitution Fund, a pioneering investor protection program believed to be the first of its kind created by any state. The Securities Restitution Fund will tap into the Securities Enforcement Fund, which for years has been used to educate Hoosiers and to finance the operations of the Indiana Securities Division and the Prosecution Assistance Unit.

“Now, in addition to what the enforcement fund already does, we will be able to compensate Hoosiers, when the facts dictate and enough funds are available, for the harm they incurred,” said Secretary Rokita.  “Its another example of how the Secretary of State’s office has, for eight years, listened to the people of Indiana and have put them first, by going to the General Assembly with innovative ideas that matter.”

In many investment fraud cases, victims are only able to recover pennies on the dollar. The new law will give the Indiana Securities Commissioner the ability to award victims a portion of their losses up to $15,000 or 25 percent of unrecovered awards (whichever is less). Eligible victims will be required to show proof that restitution was awarded by a court or administrative agency. The fund will be established with an initial $2 million from Securities Division fines collected against violators of the Indiana Securities Act. The Securities Restitution Fund will continue to be derived from the Enforcement Fund, which is funded by fines, and will not depend upon the use of any tax dollars.

“The establishment of a Securities Restitution Fund was among our top legislative initiatives this session,” said Secretary Rokita. “Indiana Securities Commissioner Chris Naylor and the staff of the Indiana Securities Division provided expert information for legislators as they crafted this bill. I applaud our attorneys and the members of the General Assembly – specifically bill authors Representatives Bardon and Burton – for carrying this law to support Hoosier investors.”

House Bill 1332, authored by Representatives Jeb Bardon and Woody Burton, was passed by a 96-0 vote by the Indiana House of Representatives and a 47-2 vote by the Indiana Senate. It includes several other provisions related to the enforcement of the Securities Act, including giving the Securities Commissioner the ability to reward a whistleblower who reports Securities Act violations and requiring new investment adviser representatives to undergo FBI criminal background checks. An additional provision will allow the Securities Division to seek asset freezes against Loan Brokers in cases of fraud. The new consumer protection provisions will assist the Indiana Securities Division and Prosecution Assistance Unit in protecting Hoosiers against white collar crime.

About the Indiana Securities Division:
The Indiana Securities Division oversees Indiana's securities industry as well as the activities of mortgage brokers, collection agencies, franchisors and continuing care retirement centers. The Division is charged with protecting Hoosier investors by bringing enforcement actions against companies and individuals selling securities in violation of Indiana's securities laws and by educating Hoosiers about prudent investing.

About the Prosecution Assistance Unit:
In 2004, Indiana Secretary of State Todd Rokita created the Prosecution Assistance Unit within the Securities Division of the Secretary of State’s Office. Its sole purpose is to assist police and prosecutors in investigating and prosecuting criminal violations of the Indiana Securities Act and the Indiana Loan Brokers Act. The investigators and attorneys in the unit collectively have over 72 years of experience in investigating and prosecuting criminals. Since its inception, the Unit has helped to convict 48 criminals in state and federal courts across Indiana. In addition, courts have handed down over 300 years in sentences, and have ordered over $29.9 million in restitution for crime victims. The Unit operates under the direction and supervision of the Securities Commissioner and the Senior Investigator.

Media Contact: Jim Gavin: 317.233-8655 or