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WEST virginia legislature
2023 regular session
Committee Substitute
for
Committee Substitute
for
Senate Bill 576
By Senators Weld, Oliverio, Stuart, Taylor, Plymale, Smith, Jeffries, and Queen
[Originating in the Committee on Finance; reported on February 24, 2023]
A BILL to amend and reenact §32-4-407a of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new article, 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 generally 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 Assistance Fund; authorizing the awarding of restitution in an administrative assessment; 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; and providing an effective date.
Be it enacted by the Legislature of West Virginia:
(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) of this subsection against a broker-dealer, agent, investment adviser, or investment adviser representative registered under section two hundred one, article two of this chapter §32-2-201 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 t$10,000 for a single violation or of up to f$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 constitutes 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.
This article may be cited as the Securities Violations Restitution Assistance Act.
As used in this article, unless context demands otherwise, 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 the provisions of §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 Assistance 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.
There is created in the State Treasury the Securities Restitution Assistance Fund. Expenditures from that fund shall be for the purposes set forth in §32-7-701 et seq. of this code, namely, to provide restitution assistance to victims who have been awarded restitution a final order issued by the commissioner of securities or who were awarded restitution in a final order of a court of competent jurisdiction for a violation of this chapter, and who have not received the full amount of restitution ordered before the application for restitution assistance is due. Money shall be deposited into this fund as provided for in §32-4-406(d) of this code. The Auditor may use the Securities Restitution Assistance Fund for the administration and operation of the restitution program created by this article.
(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 subsection (b) of this section, 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.
(a) The commissioner may award restitution assistance to a claimant in an amount that is:
(1) Either a total of up to $25,000 or 25 percent of the amount of unpaid restitution awarded in a final order, whichever is greater; or
(2) Either a total of up to $50,000 or 50 percent of the amount of unpaid restitution awarded in a final order, whichever is greater, 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.
The commissioner may not award restitution assistance to a victim who participated in or committed a securities violation, including, but not limited to:
(1) Participating or assisting in the securities violation;
(2) Attempting to commit or committing the securities violation; or
(3) The victim profited or would have profited from the securities violation.
The commissioner is subrogated to the rights of a claimant awarded restitution assistance under this article to the extent of the restitution assistance award made. The subrogation rights are against the person or other entity ordered to pay restitution to a claimant for the securities violation.
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 shall 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 by §32-7-703 of this code.
If payment of restitution assistance would result in the Securities Restitution Assistance 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.
A restitution assistance award made by the commissioner under this article is not subject to execution, attachment, garnishment, or other legal recovery process, except those executions, attachments, garnishments, or other legal recovery processes brought by or on behalf of the State of West Virginia.
To facilitate the implementation and administration of this article, the commissioner may propose rules for legislative approval in accordance with the provisions of §29A-3-1 et seq. of this code.
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.
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