Citations Affected: IC 5-20-1-27; IC 9-23-6-4; IC 23-2; IC 23-19; IC 25-11-1-15.
Synopsis: Home ownership education account. Requires that fees and
funds accruing from the administration of the Indiana Securities Act
(IC 23-19) and other statutes must be deposited in the home ownership
education account. Abolishes the securities division enforcement
account. Makes conforming amendments.
Effective: July 1, 2010.
January 13, 2010, read first time and referred to Committee on Financial Institutions.
A BILL FOR AN ACT to amend the Indiana Code concerning state
offices and administration.
directing rescission, restitution, or disgorgement against a person who
has violated this chapter or a rule or order under this chapter.
(b) Upon the issuance of an order or a notice by the commissioner under subsection (a), the commissioner shall promptly notify the respondent of the following:
(1) That the order or notice has been issued.
(2) The reasons the order or notice has been issued.
(3) That upon the receipt of a written request the matter will be set for a hearing to commence not later than forty-five (45) business days after the commissioner receives the request, unless the respondent consents to a later date.
If the respondent does not request a hearing and the commissioner does not order a hearing, the order or notice will remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of the hearing, may modify or vacate the order or extend it until final determination.
(c) In a final order, the commissioner may charge the costs of an investigation or a proceeding conducted in connection with a violation of:
(1) this chapter; or
(2) a rule or an order adopted or issued under this chapter;
to be paid as directed by the commissioner in the order.
(d) In a proceeding in a circuit or superior court under this section, the commissioner is entitled to recover all costs and expenses of investigation to which the commissioner would be entitled in an administrative proceeding, and the court shall include the costs in its final judgment.
(e) If the commissioner determines, after notice and opportunity for a hearing, that a person has violated this chapter, the commissioner may, in addition to or instead of all other remedies, impose a civil penalty upon the person in an amount not to exceed ten thousand dollars ($10,000) for each violation. An appeal from the decision of the commissioner imposing a civil penalty under this subsection may be taken by an aggrieved party under section 44 of this chapter.
(f) The commissioner may bring an action in the circuit or superior court of Marion County to enforce payment of any penalty imposed under subsection (e).
(g) Penalties collected under this section shall be deposited in the
securities division enforcement home ownership education account
established under IC 23-19-6-1(f). IC 5-20-1-27.
JULY 1, 2010]: Sec. 43. (a) All fees and funds of whatever character
accruing from the administration of this chapter shall be:
(1) accounted for by the secretary of state;
(2) paid into the state treasury monthly; and
(3) placed in the
same home ownership education account of the
state general fund as established by IC 23-19-6-1(f), from which
all compensation and expenses shall be paid for the
administration of this chapter. IC 5-20-1-27.
(b) The fee for filing a form for registration by notification of the sale of franchises under section 10.5 of this chapter is five hundred dollars ($500).
(c) The fee for filing a registration renewal form under section 18 of this chapter is two hundred fifty dollars ($250).
(d) When a registration notification form or registration renewal form is denied or withdrawn, the commissioner shall retain one hundred fifty dollars ($150) of the fee.
JULY 1, 2010]: Sec. 28. (a) The commissioner may make
investigations in or outside Indiana that the commissioner finds
necessary or appropriate to:
(1) determine whether any person has violated or is about to violate this chapter or any rule or order of the commissioner; or
(2) aid in the enforcement of this chapter.
(b) The commissioner may charge as costs of an investigation or examination all reasonable expenses, including a per diem prorated on the salary of the commissioner or an employee. All reasonable expenses of investigation, examination, or hearing shall be paid by the party under investigation or examination.
(c) The commissioner may publish information concerning any violation of this chapter or any rule or order of the commissioner. The commissioner shall upon request make available for inspection and copying under IC 5-14-3 information concerning any violation of this chapter or any rule or order of the commissioner.
(d) For purposes of an investigation or a proceeding under this chapter, the commissioner or an officer or employee designated by rule or order may do any of the following:
(1) Administer oaths and affirmations.
(2) Subpoena witnesses and compel the attendance of witnesses.
(3) Take evidence.
(4) Require the production of books, papers, correspondence, memoranda, agreements, or other documents or records that the commissioner finds to be relevant or material to the investigation or proceeding.
(e) If a person does not give testimony or produce the documents required by the commissioner or the commissioner's designee under an administrative subpoena, the commissioner or the designee may petition for a court order compelling compliance with the subpoena or the giving of the required testimony.
(f) A petition for an order of compliance under subsection (e) may be filed in any of the following:
(1) The circuit or superior court of a county containing a consolidated city.
(2) The circuit or superior court where service may be obtained on the person refusing to comply with the subpoena if the person is within Indiana.
(3) The appropriate court of the state having jurisdiction over the person refusing to comply with the subpoena if the person is outside Indiana.
(g) Costs of investigations, examinations, and hearings and civil
penalties recovered under this chapter shall be deposited in the
securities division enforcement home ownership education account
established under IC 23-19-6-1(f). With the approval of the budget
agency, the funds in the securities division enforcement account may
be used to augment and supplement the funds appropriated for the
administration of this chapter. IC 5-20-1-27.
similar status or performing similar functions, or a person directly or
indirectly in control of the broker-dealer or investment adviser.
(d) A person may be disciplined under subsections (a) through (c) if the person:
(1) has filed an application for registration in this state under this article or the predecessor act within the previous ten (10) years, which, as of the effective date of registration or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained a statement that, in light of the circumstances under which it was made, was false or misleading with respect to a material fact;
(2) knowingly violated or knowingly failed to comply with this article or the predecessor act or a rule adopted or order issued under this article or the predecessor act within the previous ten (10) years;
(3) has been convicted of a felony or within the previous ten (10) years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;
(4) is enjoined or restrained by a court with jurisdiction in an action instituted by the commissioner under this article or the predecessor act, a state, the Securities and Exchange Commission, or the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;
(5) is the subject of an order, issued after notice and opportunity for hearing, by:
(A) the securities, depository institution, insurance, or other financial services regulator of a state or by the Securities and Exchange Commission or other federal agency denying, revoking, barring, or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative;
(B) the securities regulator of a state or the Securities and Exchange Commission against a broker-dealer, agent, investment adviser, investment adviser representative, or federal covered investment adviser;
(C) the Securities and Exchange Commission or a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory
(D) a court adjudicating a United States Postal Service fraud order;
(E) the insurance regulator of a state denying, suspending, or revoking registration as an insurance agent;
(F) a depository institution regulator suspending or barring the person from the depository institution business; or
(G) any state regulatory body or organization governing real estate brokers or sales persons denying, suspending, or revoking a person's registration or license in the real estate industry;
(6) is the subject of an adjudication or determination, after notice and opportunity for hearing, by the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, a federal depository institution regulator, or a depository institution, insurance, or other financial services regulator of a state that the person willfully violated the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or the Commodity Exchange Act, the securities or commodities law of a state, or a federal or state law under which a business involving investments, franchises, insurance, banking, or finance is regulated;
(7) is insolvent, either because the person's liabilities exceed the person's assets or because the person cannot meet the person's obligations as they mature, but the commissioner may not enter an order against an applicant or registrant under this subdivision without a finding of insolvency as to the applicant or registrant;
(8) refuses to allow or otherwise impedes the commissioner from conducting an audit or inspection under section 11(d) of this chapter or refuses access to a registrant's office to conduct an audit or inspection under section 11(d) of this chapter;
(9) has failed to reasonably supervise an agent, investment adviser representative, or other individual, if the agent, investment adviser representative, or other individual was subject to the person's supervision and committed a violation of this article or the predecessor act or a rule adopted or order issued under this article or the predecessor act within the previous ten (10) years;
(10) has not paid the proper filing fee within thirty (30) days after having been notified by the commissioner of a deficiency, but the commissioner shall vacate an order under this subdivision when the deficiency is corrected;
in part, an examination as to a class of individuals if the commissioner
determines that the examination is not necessary or appropriate in the
public interest and for the protection of investors.
(f) The commissioner may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the commissioner shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, and that within fifteen (15) days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the commissioner within thirty (30) days after the date of service of the order, the order becomes final by operation of law. If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend the order until final determination.
(g) An order may not be issued under this section, except under subsection (f), without:
(1) appropriate notice to the applicant or registrant;
(2) opportunity for hearing; and
(3) findings of fact and conclusions of law in a record.
(h) A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the commissioner under subsections (a) through (c) to the same extent as the noncomplying person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct that is a ground for discipline under this section.
(i) The commissioner may not institute a proceeding under subsection (a), (b), or (c) based solely on material facts actually known by the commissioner unless an investigation or the proceeding is instituted within one (1) year after the commissioner actually acquires knowledge of the material facts.
(j) All fines and penalties collected under this section shall be deposited into the
securities division enforcement home ownership
education account as established by IC 23-19-6-1(f). IC 5-20-1-27.
this article under the direction and control of the secretary of state. The
salary of the securities commissioner shall be paid out of the funds
appropriated for the administration of this article. The commissioner
shall serve at the will of the secretary of state.
(b) The secretary of state:
(1) shall employ a chief deputy, attorneys, a senior investigator, a senior accountant, and other deputies, investigators, accountants, clerks, stenographers, and other employees necessary for the administration of this article; and
(2) shall fix their compensation with the approval of the budget agency.
(c) It is unlawful for the commissioner or an officer, employee, or designee of the commissioner to use for personal benefit or the benefit of others records or other information obtained by or filed with the commissioner that are not public under section 7(b) of this chapter. This article does not authorize the commissioner or an officer, employee, or designee of the commissioner to disclose the record or information, except in accordance with section 2, 7(c), or 8 of this chapter.
(d) This article does not create or diminish a privilege or exemption that exists at common law, by statute or rule, or otherwise.
(e) The commissioner may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud. In developing and implementing these initiatives, the commissioner may collaborate with public and nonprofit organizations with an interest in investor education. The commissioner may accept a grant or donation from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives. This subsection does not authorize the commissioner to require participation or monetary contributions of a registrant in an investor education program.
(f) Fees and funds of whatever character accruing from the administration of this article shall be accounted for by the secretary of state and shall be deposited with the treasurer of state.
to be deposited
by The treasurer of the state in either shall deposit these fees and
funds in the home ownership education account of the state general
fund or the enforcement account referenced below. established by
IC 5-20-1-27. Expenses incurred in the administration of this article
shall be paid from the state general fund upon appropriation being
made for the expenses in the manner provided by law for the making
of those appropriations.
However, grants and donations under
subsection (e), costs of investigations, and civil penalties recovered
under sections 3(b) and 4(d) of this chapter shall be deposited by the
treasurer of state in a separate account to be known as the securities
division enforcement account. The funds in the enforcement account
shall be available, with the approval of the budget agency:
(1) to augment and supplement the funds appropriated for the
administration of this article; and
(2) for grants and awards to nonprofit entities for programs and
activities that will further investor education and financial literacy
in the state.
The funds in the enforcement account do not revert to the state general
fund at the end of any state fiscal year.
(g) In connection with the administration and enforcement of this article, the attorney general shall render all necessary assistance to the commissioner upon the commissioner's request, and to that end, the attorney general shall employ legal and other professional services as are necessary to adequately and fully perform the service under the direction of the commissioner as the demands of the securities division shall require. Expenses incurred by the attorney general for the purposes stated in this subsection shall be chargeable against and paid out of funds appropriated to the attorney general for the administration of the attorney general's office. The attorney general may authorize the commissioner and the commissioner's designee to represent the commissioner and the securities division in any proceeding involving enforcement or defense of this article.
(h) Neither the secretary of state, the commissioner, nor an employee of the securities division shall be liable in their individual capacity, except to the state, for an act done or omitted in connection with the performance of their respective duties under this article.
(i) The commissioner shall take, prescribe, and file the oath of office prescribed by law. The commissioner, chief deputy commissioner, and each attorney or investigator designated by the commissioner are police officers of the state and shall have all the powers and duties of police officers in making arrests for violations of this article, or in serving any process, notice, or order connected with the enforcement of this article by whatever officer, authority, or court issued and shall comprise the enforcement department of the division and are considered a criminal justice agency for purposes of IC 5-2-4 and IC 10-13-3.
(j) The provisions of this article delegating and granting power to the secretary of state, the securities division, and the commissioner
shall be liberally construed to the end that:
(1) the practice or commission of fraud may be prohibited and prevented;
(2) disclosure of sufficient and reliable information in order to afford reasonable opportunity for the exercise of independent judgment of the persons involved may be assured; and
(3) the qualifications may be prescribed to assure availability of reliable broker-dealers, investment advisers, and agents engaged in and in connection with the issuance, barter, sale, purchase, transfer, or disposition of securities in this state.
It is the intent and purpose of this article to delegate and grant to and vest in the secretary of state, the securities division, and the commissioner full and complete power to carry into effect and accomplish the purpose of this article and to charge them with full and complete responsibility for its effective administration.
(k) Copies of any statement and documents filed in the office of the secretary of state and of any records of the secretary of state certified by the commissioner shall be admissible in any prosecution, action, suit, or proceeding based upon, arising out of, or under this article to the same effect as the original of such statement, document, or record would be if actually produced.
(l) IC 4-21.5 is not applicable to any of the proceedings under this article.
general or specific execution, and appointment of a receiver or
(B) ordering a receiver or conservator appointed under clause (A) to take charge and control of a respondent's property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property;
(C) imposing a civil penalty up to ten thousand dollars ($10,000) per violation and an order of rescission, restitution, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this article or the predecessor act or a rule adopted or order issued under this article or the predecessor act; and
(D) ordering the payment of prejudgment and postjudgment interest; or
(3) order such other relief as the court considers appropriate.
(c) The commissioner may not be required to post a bond in an action or proceeding under this article.
(d) Penalties collected under this section shall be deposited in the
securities division enforcement home ownership education account
established under section 1 of this chapter. IC 5-20-1-27.
order. The court may not require the commissioner to post a bond in an
action or proceeding under this section. If the court finds, after service
and opportunity for hearing, that the person was not in compliance with
the order, the court may adjudge the person in civil contempt of the
order. The court may impose a further civil penalty against the person
for contempt in an amount not greater than twenty thousand dollars
($20,000) for each violation and may grant any other relief the court
determines is just and proper in the circumstances.
(h) The commissioner shall send a certified copy of every final order that suspends or revokes a person's registration under this article, or that orders a person who is not registered under this article to cease and desist from violating this article, to the insurance commissioner appointed under IC 27-1-1-2. The insurance commissioner shall act in accordance with IC 27-1-15.6-29.5.