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Secretary of State

Securities Division > News Archive  > 2006 Press Releases > For Immediate Release: September 27, 2006 Hoosiers to Benefit from Enforcement Fund Boost

Contact: AJ Freeney-Ruiz
317-233-8655

Contact: Jen Fanger
317-234-2962
Media@sos.in.gov

Indianapolis, IN - Today, Indiana Secretary of State Todd Rokita announced that Indiana has received a $461,948 boost to its Securities Enforcement Fund, which is dedicated to protecting Hoosier investors. The payment represents Indiana's share of a $25 million multi-state enforcement settlement with Wachovia Capital Markets, LLC, involving allegations of potential conflicts of interest between the firm's research and investment banking operations.

The settlement, which does not require Wachovia to admit any violations, results from allegations that Wachovia Capital Markets research analysts were recommending investments promoted by another branch within the company - a practice that is viewed as a conflict of interest. The activities at issue were pervasive and embedded in the business practices of the firm over a prolonged period of time. To date, Rokita has helped obtain judgments in the amount of $12,125,763 to be paid directly to Hoosier families who have fallen prey to investment scams. As with Wachovia and many similar cases, individual investors cannot be identified, damages cannot be quantified, or the resulting restitution would amount to only returning pennies on the dollar. In these cases, settlement money is placed in the Enforcement Fund

Indiana's Enforcement Fund is used to support the Prosecution Assistance Unit (PAU), the current Indiana Investment Watch education and public awareness program, and other investor outreach initiatives - such as grants to the Indiana Council for Economic Education to support investor education initiatives for Indiana students. The fund is also used to ease the burden on taxpayers of securities enforcement activities.

"We will continue to educate Hoosier investors about investment fraud and protect their hard-earned savings," Rokita said. "We have a dedicated team that works diligently to maintain investor confidence by prosecuting the worst-of-the worst of white-collar criminals and by providing valuable resources for Indiana investors."

The PAU was created by Rokita and his Securities Division in 2004 to further existing investigations and facilitate local law enforcement's prosecution of alleged Securities Act violations. The focus of the PAU is to assist state prosecutors in an effort to work together at the courthouse and Statehouse to root out white-collar crime. By working with law enforcement throughout the state, the office has already helped to file charges in 24 high-profile investment fraud cases in Indiana, and has a 18 to 1 conviction-to-dismissal record, with over 170 years of jail time sentenced to-date.

Indiana Investment Watch is a broad-based campaign created by Indiana Secretary of State Todd Rokita as an effort to reach and educate Hoosiers who currently invest or may soon be looking for investment opportunities. Created after a statewide survey showed that nearly two-thirds of Indiana adults who own financial investments have little or no knowledge about potential fraud schemes or the security of investments, this program combats the lack of fraud awareness among all Hoosiers. More information about the program and its initiatives can be found at http://www.in.gov/sos/securities/investmentwatch/.

Indiana Investment Watch is a free service and is funded entirely from the fines, similar to this settlement with Wachovia, paid by stock brokerage firms in connection with the settlement of stock analyst conflict of interest cases.

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