Bill Text: IN HB1294 | 2012 | Regular Session | Engrossed
Bill Title: Various securities division matters.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Enrolled - Dead) 2012-03-15 - Signed by the Governor [HB1294 Detail]
Download: Indiana-2012-HB1294-Engrossed.html
Citations Affected: IC 4-5; IC 23-2; IC 23-19; IC 23-20; IC 25-11.
Effective: July 1, 2012.
(SENATE SPONSORS _ SMITH J, MRVAN)
January 11, 2012, read first time and referred to Committee on Financial Institutions.
January 23, 2012, reported _ Do Pass.
January 26, 2012, read second time, ordered engrossed. Engrossed.
January 30, 2012, read third time, passed. Yeas 93, nays 0.
February 1, 2012, read first time and referred to Committee on Insurance and Financial Institutions.
February 16, 2012, reported favorably _ Do Pass.
February 28, 2012, read second time, amended, ordered engrossed.
Digest Continued
register as, an agent for a securities broker-dealer or as an investment adviser representative if the individual has failed to comply with a court order imposing a child support obligation. Repeals a provision that allows the commissioner to award up to 10% of a penalty imposed and recovered under the Indiana uniform securities act (act) to a person who provides information leading to the imposition of the penalty. Provides that the commissioner may provide an award, in an amount determined by the commissioner and paid from the securities restitution fund, to an informant who provides to the securities division of the office of the secretary of state original information concerning a violation of the act, if the information provided leads to the successful enforcement of a judicial or an administrative action concerning the violation. Provides that the total amount of awards in any proceeding may not exceed 10% of the total monetary sanctions imposed or ordered. Sets forth certain factors that the commissioner must consider in determining the amount of an award. Prohibits the commissioner from providing an award to an informant in certain circumstances. Amends the statute concerning the licensing of collection agencies by the secretary of state to: (1) allow the secretary of state to designate a multistate automated licensing system and repository to serve as the sole entity responsible for processing applications for licenses and license renewals; and (2) provide that a license expires on the last day of the calendar year in which the license was issued (instead of expiring on the last day of the calendar year after the year in which the license was issued, as provided for in current law). Makes technical changes. Makes an appropriation.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
business and other associations and to make an appropriation.
(1) The enrolled copy of the constitution of the state.
(2) The manuscripts containing the enrolled acts and joint resolutions of the general assembly.
(3) All the official bonds of state officers except the secretary of state's bond.
(4) All written contracts to which the state is a party, unless required to be deposited elsewhere.
(5) Any rule or other agency statement that is filed under IC 4-22-2 before July 1, 2006.
(b) All documents described in subsection (a)(1), (a)(2), or (a)(5) may be transferred by the secretary of state to the commission on
public records for safekeeping, and the commission shall receive and
safely preserve them when transferred. The secretary of state and the
commission on public records shall establish an indexing system so
that the secretary of state, an agency, or the commission on public
records can comply with a request under IC 5-14-3 to inspect or copy
a transferred document described in subsection (a)(5), including the
full text of a matter incorporated by reference into a document
described in subsection (a)(5). The indexing system must at least
identify transferred documents by the following:
(1) Indiana Administrative Code citation.
(2) Indiana Register document control number or volume and
page number.
(3) Year of adoption.
(4) General subject matter.
(c) Regardless of whether a document described in subsection (a)(1)
or (a)(2) is transferred to the commission on public records under
subsection (b), when deemed expedient or necessary for the
preservation of the documents, the secretary of state may copy the
documents by any micrographic or equivalent technique, and the
micrographic copies shall be stored in a place other than in the state
capitol building or the Indiana state library.
(d) The secretary of state may copy in micrographic or equivalent
form the complete contents of each rule that is filed with the secretary
of state's office under IC 4-22-2 before July 1, 2006. Both the rule and
the full text of matters incorporated by reference into the rule may be
copied.
(e) Micrographic Copies prepared under subsection (d) must
conform with the following:
(1) The standards developed by the supreme court and the
oversight commission on public records under IC 5-15-5.1-8.
(2) The standards developed in an agreement between the
secretary of state, the publisher of the Indiana Register, the
governor, the attorney general, the Indiana library and historical
department, and the commission on public records.
(f) The secretary of state may micrographically copy,
micrographically or through an equivalent method, documents
under subsection (d):
(1) in the micrographic laboratory operated under IC 5-15-5.1-8
by the commission on public records; under IC 5-15-5.1-8;
(2) with equipment and technology operated by the secretary of
state; or
(3) through a contract for services procured under IC 5-22.
(g) When a document is
(b) As used in this chapter, "licensee" means a person that is issued a license under this chapter.
(c) As used in this chapter, "loan broker" means any person who, in return for any consideration from any source procures, attempts to procure, or assists in procuring, a residential mortgage loan from a third party or any other person, whether or not the person seeking the loan actually obtains the loan. "Loan broker" does not include:
(1) any supervised financial organization (as defined in IC 26-1-4-102.5), including a bank, savings bank, trust company, savings association, or credit union;
(2) any other financial institution that is:
(A) regulated by any agency of the United States or any state; and
(B) regularly actively engaged in the business of making consumer loans that are not secured by real estate or taking assignment of consumer sales contracts that are not secured by real estate;
(3) any insurance company;
(4) any person arranging financing for the sale of the person's product; or
(5) a creditor that is licensed under IC 24-4.4-2-402.
(d) As used in this chapter, "loan brokerage business" means a person acting as a loan broker.
(e) As used in this chapter, "mortgage loan origination activities" means performing any of the following activities for compensation or gain in connection with a residential mortgage loan:
(1) Receiving or recording a borrower's or potential borrower's
residential mortgage loan application information in any form for
use in a credit decision by a creditor.
(2) Offering to negotiate or negotiating terms of a residential
mortgage loan.
(f) As used in this chapter, "borrower's residential mortgage loan
application information" means the address of the proposed residential
real property to be mortgaged and borrower's essential personal and
financial information necessary for an informed credit decision to be
made on the borrower's mortgage loan application.
(g) As used in this chapter, "mortgage loan originator" means an
individual engaged in mortgage loan origination activities. The term
does not include a person who:
(1) performs purely administrative or clerical tasks on behalf of
a mortgage loan originator or acts as a loan processor or
underwriter;
(2) performs only real estate brokerage activities and is licensed
in accordance with IC 25-34.1 or the applicable laws of another
state, unless the person is compensated by a creditor, a loan
broker, a mortgage loan originator, or any agent of a creditor, a
loan broker, or a mortgage loan originator; or
(3) is involved only in extensions of credit relating to time share
plans (as defined in 11 U.S.C. 101(53D)).
(h) As used in this chapter, "mortgage loan originator license"
means a license issued by the commissioner authorizing an individual
to act as a mortgage loan originator on behalf of a loan broker licensee.
(i) As used in this chapter, "person" means an individual, a
partnership, a trust, a corporation, a limited liability company, a limited
liability partnership, a sole proprietorship, a joint venture, a joint stock
company, or another group or entity, however organized.
(j) As used in this chapter, "ultimate equitable owner" means a
person who, directly or indirectly, owns or controls ten percent (10%)
or more of the equity interest in a loan broker licensed or required to be
licensed under this chapter, regardless of whether the person owns or
controls the equity interest through one (1) or more other persons or
one (1) or more proxies, powers of attorney, or variances.
(k) As used in this chapter, "principal manager" means an individual
who:
(1) has at least three (3) years of experience:
(A) as a mortgage loan originator; or
(B) in financial services;
that is acceptable to the commissioner; and
(2) is principally responsible for the supervision and management
of the employees and business affairs of a loan broker licensee.
(l) As used in this chapter, "principal manager license" means a
license issued by the commissioner authorizing an individual to act as:
(1) a principal manager; and
(2) a mortgage loan originator;
on behalf of a loan broker licensee.
(m) As used in this chapter, "bona fide third party fee", with respect
to a residential mortgage loan, includes any of the following:
(1) Fees for real estate appraisals. However, if the residential
mortgage loan is governed by Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act (12 U.S.C. 3331 through
3352), the fee for an appraisal performed in connection with the
loan is not a bona fide third party fee unless the appraisal is
performed by a person that is licensed or certified under
IC 25-34.1-3-8.
(2) Fees for title examination, abstract of title, title insurance,
property surveys, or similar purposes.
(3) Notary and credit report fees.
(4) Fees for the services provided by a loan broker in procuring
possible business for a creditor if the fees are paid by the creditor.
(n) As used in this chapter, "branch office" means any fixed physical
location from which a loan broker licensee holds itself out as engaging
in the loan brokerage business.
(o) As used in this chapter, "loan processor or underwriter" means
an individual who:
(1) is employed by a loan broker licensee and acts at the direction
of, and subject to the supervision of, the loan broker licensee or
a licensed principal manager employed by the loan broker
licensee; and
(2) performs solely clerical or support duties on behalf of the loan
broker licensee, including any of the following activities with
respect to a residential mortgage loan application received by the
loan broker licensee:
(A) The receipt, collection, distribution, and analysis of
information commonly used in the processing or underwriting
of a residential mortgage loan.
(B) Communicating with a borrower or potential borrower to
obtain the information necessary for the processing or
underwriting of a residential mortgage loan, to the extent that
the communication does not include:
(i) offering or negotiating loan rates or terms; or
(ii) counseling borrowers or potential borrowers about
residential mortgage loan rates or terms.
(p) As used in this chapter, "real estate brokerage activity" means
any activity that involves offering or providing real estate brokerage
services to the public, including any of the following:
(1) Acting as a real estate broker or salesperson for a buyer, seller,
lessor, or lessee of real property.
(2) Bringing together parties interested in the sale, lease, or
exchange of real property.
(3) Negotiating, on behalf of any party, any part of a contract
concerning the sale, lease, or exchange of real property, other than
in connection with obtaining or providing financing for the
transaction.
(4) Engaging in any activity for which the person performing the
activity is required to be licensed under IC 25-34.1 or the
applicable laws of another state.
(5) Offering to engage in any activity, or to act in any capacity
with respect to any activity, described in subdivisions (1) through
(4).
(q) As used in this chapter, "registered mortgage loan originator"
means a mortgage loan originator who:
(1) is an employee of:
(A) a depository institution;
(B) a subsidiary that is:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal financial institution regulatory
agency (as defined in 12 U.S.C. 3350(6)); or
(C) an institution regulated by the Farm Credit Administration;
and
(2) is registered with and maintains a unique identifier with the
Nationwide Mortgage Licensing System and Registry.
(r) As used in this chapter, "residential mortgage loan" means a loan
that is or will be used primarily for personal, family, or household
purposes and that is secured by a mortgage deed of trust, (or other
another equivalent consensual security interest) on a dwelling ( as
defined in Section 103(w) of the federal Truth in Lending Act (15
U.S.C. 1602(w)) or on residential real estate in Indiana on which there
a dwelling is located constructed or intended to be constructed. a
dwelling (as defined in the federal Truth in Lending Act (15 U.S.C.
1602(v)) that is or will be used primarily for personal, family, or
household purposes.
(s) As used in this chapter, "personal information" includes any of
the following:
(1) An individual's first and last names or first initial and last name.
(2) Any of the following data elements:
(A) A Social Security number.
(B) A driver's license number.
(C) A state identification card number.
(D) A credit card number.
(E) A financial account number or debit card number in combination with a security code, password, or access code that would permit access to the person's account.
(3) With respect to an individual, any of the following:
(A) Address.
(B) Telephone number.
(C) Information concerning the individual's:
(i) income or other compensation;
(ii) credit history;
(iii) credit score;
(iv) assets;
(v) liabilities; or
(vi) employment history.
(t) As used in this chapter, personal information is "encrypted" if the personal information:
(1) has been transformed through the use of an algorithmic process into a form in which there is a low probability of assigning meaning without use of a confidential process or key; or
(2) is secured by another method that renders the personal information unreadable or unusable.
(u) As used in this chapter, personal information is "redacted" if the personal information has been altered or truncated so that not more than the last four (4) digits of:
(1) a Social Security number;
(2) a driver's license number;
(3) a state identification number; or
(4) an account number;
are accessible as part of the personal information.
(v) As used in this chapter, "depository institution" has the meaning set forth in the Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes any credit union.
(w) As used in this chapter, "state licensed mortgage loan originator" means any individual who:
(1) is a mortgage loan originator;
(2) is not an employee of:
(A) a depository institution;
(B) a subsidiary that is:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal financial institution regulatory agency (as defined in 12 U.S.C. 3350(6)); or
(C) an institution regulated by the Farm Credit Administration;
(3) is licensed by a state or by the Secretary of the United States Department of Housing and Urban Development under Section 1508 of the S.A.F.E. Mortgage Licensing Act of 2008 (Title V of P.L.110-289); and
(4) is registered as a mortgage loan originator with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(x) As used in this chapter, "unique identifier" means a number or other identifier that:
(1) permanently identifies a mortgage loan originator; and
(2) is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry and the federal financial institution regulatory agencies to facilitate:
(A) the electronic tracking of mortgage loan originators; and
(B) the uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators.
(y) As used in this chapter, "residential real estate" means real property:
(1) that is located in Indiana; and
(2) upon which a dwelling is constructed or intended to be constructed.
(b) If the commissioner finds that the order is in the public interest
and subsection (d) authorizes the action, an order issued under this
article may revoke, suspend, condition, or limit the registration of a
registrant and, if the registrant is a broker-dealer or investment adviser,
of a partner, officer, director, or person having a similar status or
performing similar functions, or a person directly or indirectly in
control of the broker-dealer or investment adviser. However, the
commissioner may not:
(1) institute a revocation or suspension proceeding under this
subsection based on an order issued under a law of another state
that is reported to the commissioner or a designee of the
commissioner more than one (1) year after the date of the order on
which it is based; or
(2) under subsection (d)(5)(A) and (d)(5)(B), issue an order on
the basis of an order issued under the securities act of another
state unless the other order was based on conduct for which
subsection (d) would authorize the action had the conduct
occurred in this state.
(c) If the commissioner finds that the order is in the public interest
and subsection (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(6), (d)(8), (d)(9),
(d)(10), (d)(11), (d)(12), or (d)(13) authorizes the action, an order
under this article may censure, impose a bar, or impose a civil penalty
in an amount not to exceed a maximum of ten thousand dollars
($10,000) per violation on a registrant, and, if the registrant is a
broker-dealer or investment adviser, a partner, officer, director, or
person having a 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
organization;
(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;
(11) after notice and opportunity for a hearing, has been found
within the previous ten (10) years:
(A) by a court with jurisdiction to have willfully violated the
laws of a foreign jurisdiction under which the business of
securities, commodities, investment, franchises, insurance,
banking, or finance is regulated;
(B) to have been the subject of an order of a securities
regulator of a foreign jurisdiction denying, revoking, or
suspending the right to engage in the business of securities as
a broker-dealer, agent, investment adviser, investment adviser
representative, or similar person; or
(C) to have been suspended or expelled from membership by
or participation in a securities exchange or securities
association operating under the securities laws of a foreign
jurisdiction;
(12) is the subject of a cease and desist order issued by the
Securities and Exchange Commission or issued under the
securities, commodities, investment, franchise, banking, finance,
or insurance laws of a state;
(13) has engaged in dishonest or unethical practices in the
securities, commodities, investment, franchise, banking, finance,
or insurance business within the previous ten (10) years;
(14) is not qualified on the basis of factors such as training,
experience, and knowledge of the securities business. However,
in the case of an application by an agent for a broker-dealer that
is a member of a self-regulatory organization or by an individual
for registration as an investment adviser representative, a denial
order may not be based on this subdivision if the individual has
successfully completed all examinations required by subsection
(e). The commissioner may require an applicant for registration
under section 2 or 4 of this chapter who has not been registered
in a state within the two (2) years preceding the filing of an
application in this state to successfully complete an examination;
or
(15) is on the most recent tax warrant list supplied to the
commissioner by the department of state revenue; or
(16) is an individual who is:
(A) an applicant for registration as an agent for a
broker-dealer or as an investment adviser representative;
or
(B) registered as an agent for a broker-dealer or as an
investment adviser representative;
and has failed to comply with a court order imposing a child
support obligation.
(e) A rule adopted or order issued under this article may require that
an examination, including an examination developed or approved by
an organization of securities regulators, be successfully completed by
a class of individuals or all individuals. An order issued under this
article may waive, in whole or in part, an examination as to an
individual and a rule adopted under this article may waive, in whole or
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 account as
established by IC 23-19-6-1(f).
(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) Subject to IC 4-2-6-15, 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 the state general fund or the enforcement account referenced below. Subject to IC 4-2-6-15, 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 received under subsection (e), costs of investigations recovered under section 4(e) of this chapter, 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. Notwithstanding IC 9-23-6-4, IC 23-2-2.5-34, IC 23-2-2.5-43, IC 23-2-5-7, IC 23-19-4-12, IC 25-11-1-15, and this chapter, five percent (5%) of funds received after June 30, 2010, for deposit in the enforcement account shall instead be deposited in the securities
restitution fund established under IC 23-20-1-26. by IC 23-20-1-25.
Subject to IC 4-2-6-15, the funds deposited 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.
Chapter 7. Awards for Reporting Securities Violations
Sec. 1. As used in this chapter, "commissioner" refers to the securities commissioner appointed by the secretary of state under IC 23-19-6-1(a).
Sec. 2. As used in this chapter, "division" refers to the securities division of the office of the secretary of state.
Sec. 3. As used in this chapter, "fund" refers to the securities restitution fund established by IC 23-20-1-25.
Sec. 4. (a) As used in this chapter, "informant" means an individual who provides original information concerning a violation of this article to the division.
(b) The term does not include an individual who is:
(1) a journalist, a reporter, or any other member of the news media if the individual discovers or acquires the original information in the course of investigating or reporting a story, as part of an assignment, or through any other means related to the individual's work for, or in connection with, the news media; or
(2) an employee of the division.
Sec. 5. As used in this chapter, "monetary sanction" refers to money required to be paid under this article as the result of a judicial or an administrative action, including any penalties imposed or amounts ordered through an order of restitution or disgorgement.
Sec. 6. As used in this chapter, "original information" means information that:
(1) is provided to the division by an informant;
(2) is derived from the independent knowledge or analysis of the informant;
(3) is not known to or derived by the informant exclusively from:
(A) an allegation made in a judicial or an administrative proceeding;
(B) a government audit, investigation, hearing, or report; or
(C) a media report or an individual described in section 4(b)(1) of this chapter; and
(4) would not otherwise be known to the division if the informant had not provided the information to the division.
Sec. 7. (a) Except as provided in section 9 of this chapter, and subject to subsection (b) and section 8 of this chapter, if:
(1) an informant:
(A) voluntarily provides in writing, and in the form or manner required by the commissioner, original information to the division; and
(B) includes, as part of the writing provided under clause (A), a signed statement indicating that the informant reasonably believes that the act or omission disclosed through the original information provided constitutes a violation of this article; and
(2) the original information provided by the informant leads to the successful enforcement of a judicial or an administrative action under this article;
the commissioner may award an amount, to be determined by the commissioner and paid from the fund, to the informant for the original information provided.
(b) The commissioner may provide an award to one (1) or more informants in any single judicial or administrative proceeding under this article. However, the aggregate amount of the awards in any single judicial or administrative proceeding may not exceed ten percent (10%) of the total monetary sanctions imposed or ordered in the action.
Sec. 8. In determining the amount of an award to be paid under this chapter, the commissioner shall consider:
(1) the significance of the original information provided by the informant to the successful enforcement of the judicial or administrative action under this article;
(2) the degree of assistance or cooperation provided by the informant in connection with the judicial or administrative proceedings;
(3) the programmatic interest of the commissioner in deterring a violation of this article by making awards to informants who provide original information leading to the successful enforcement of this article; and
(4) any other factors the commissioner considers relevant.
Sec. 9. The commissioner may not provide an award to an informant under this chapter if the informant:
(1) is convicted of a crime in connection with the judicial or administrative proceeding for which the informant provided the original information;
(2) acquired the original information in performing an examination of financial statements required under securities laws or regulations, if the informant's subsequent disclosure of the information acquired constitutes a violation of 15 U.S.C. 78j-1;
(3) fails to provide the original information to the division in the manner prescribed by section 7(a)(1) of this chapter and in accordance with any other requirements prescribed by the commissioner;
(4) knowingly or recklessly makes a false, fictitious, or fraudulent statement or a misrepresentation as part of, or in connection with:
(A) the original information provided; or
(B) the judicial or administrative proceeding for which the original information was provided;
(5) uses, relies on, or provides a false writing or document knowing that, or with reckless disregard as to whether, the writing or document contains false, fictitious, or fraudulent information;
(6) knows that, or has a reckless disregard as to whether, the original information provided is false, fictitious, or fraudulent; or
(7) has a legal duty to provide the original information to the division.
Sec. 10. This chapter does not limit or negate any right or obligation of any individual to present evidence to a grand jury or to share evidence with potential witnesses or defendants in the course of an ongoing criminal investigation.
(1) awarding restitution assistance under this chapter;
(2) paying expenses incurred in administering this chapter; and
(3) making awards to informants under IC 23-19-7.
(1) If the applicant is an individual:
(A) the individual's name;
(B) the individual's residence address;
(C) the address of each location from which the individual carries out the activities of the collection agency; and
(D) a statement that the individual satisfies the qualifications set forth in section 4 of this chapter.
(2) If the applicant is a partnership:
(A) the name of each partner;
(B) the business address of the partnership;
(C) the residence address of at least one (1) of the partners;
(D) the address of each location from which the partnership carries out the activities of the collection agency; and
(E) a statement that each partner in the partnership satisfies the
qualifications set forth in section 4 of this chapter.
(3) If the applicant is a limited liability company:
(A) the date and place of organization;
(B) the name of the limited liability company;
(C) the business address of the limited liability company;
(D) the residence address of at least one (1) of the managers or
members of the limited liability company; and
(E) a statement that each of the managers and members in the
limited liability company satisfies the qualifications set forth
in section 4 of this chapter.
(4) If the applicant is a corporation:
(A) the date and place of incorporation;
(B) the name of the corporation;
(C) the business address of the corporation;
(D) the residence address of at least one (1) of the officers of
the corporation; and
(E) a statement that each of the officers of the corporation
satisfies the qualifications set forth in section 4 of this chapter.
The application shall be duly sworn to before an officer qualified to
administer oaths. The application shall set forth therein any other
verified information which will assist the secretary of state in
determining the qualifications of the applicant to meet the requirements
of a collection agency as hereinunder set forth.
(b) Every original and renewal application of any person desiring to
conduct a collection agency shall be accompanied by a fee of one
hundred dollars ($100) plus an additional fee of thirty dollars ($30) for
each branch office operated by the applicant whether as sole owner,
partnership, limited liability company, or corporation.
(c) Any person desiring to secure a renewal of a collection agency
license shall make a renewal application to the secretary of state not
later than January 1 of the year following the year in which the person's
license expires under section 5 of this chapter. The application shall be
made on such forms as the secretary of state may prescribe. Such
application shall contain therein verified information that will assist the
secretary of state in determining whether or not the applicant is in
default, or is in violation of any of the provisions of this chapter, and
whether or not the applicant has at all times complied with the
requirements of this chapter in the operation of the applicant's
collection agency.
(d) Each renewal application shall be accompanied by the renewal
fee and an additional fee of thirty dollars ($30) for each branch office
maintained and operated by the applicant.
(e) Every original and renewal application shall be accompanied by the following:
(1) A corporate surety bond in the sum of five thousand dollars ($5,000) for each office the applicant operates in the state of Indiana. All bonds shall run to the people of the state of Indiana and shall be furnished by a surety company authorized to do business in this state. All bonds shall be conditioned upon the faithful accounting of all money collected upon accounts entrusted to such person and shall be continuous in form and shall remain in full force and effect and run continuously with the license period and any renewal thereof. All bonds shall further be conditioned upon the provision that the applicant shall, within sixty (60) days from the date of the collection of any claim, render an account of and pay to the client, for whom collection has been made, the proceeds of such collection less the charges for collection agreed upon by and between the applicant and the client. All bonds shall be filed in the office of the secretary of state and shall be approved by the secretary of state before being filed. All bonds filed and approved shall be for the use and benefit of all persons damaged by the wrongful conversion of any money by such person, and any individual so injured or aggrieved may bring an action upon such bond. The surety company may notify the secretary of state and principal of its desire to terminate its liability under any bond furnished. Thirty (30) days after receipt of such notice by the secretary of state, the secretary of state shall thereupon require the principal to file a new bond or discontinue all operations. If a new bond is filed by the principal all liability under any previous bond shall thereupon cease and terminate. If a new bond shall not be filed within the thirty (30) day period above specified the secretary of state shall, after expiration of the period, revoke the principal's license.
(2) Any applicant who is a nonresident of the state of Indiana shall also submit a statement appointing an agent or attorney resident herein, upon whom all legal process against the applicant may be served. The statement shall contain a stipulation that the applicant agrees that service of legal process upon such agent or attorney shall be valid service upon the applicant.
(f) Subject to subsection (g), the secretary of state may designate a multistate automated licensing system and repository, established and operated by a third party, to serve as the sole entity responsible for:
(1) processing applications for:
(A) licenses under this chapter; and
(B) renewals of licenses under this chapter; and
(2) performing other services that the secretary of state determines are necessary for the orderly administration of the secretary of state's licensing system under this chapter.
The secretary of state may take any action necessary to participate in a multistate automated licensing system and repository.
(g) The secretary of state's authority to designate a multistate automated licensing system and repository under subsection (f) is subject to the following:
(1) The secretary of state may not require any person that is not required to be licensed under this chapter, or any employee or agent of a person that is not required to be licensed under this chapter, to:
(A) submit information to; or
(B) participate in;
the multistate automated licensing system and repository.
(2) The secretary of state may require a person required under this chapter to submit information to the multistate automated licensing system and repository to pay a processing fee considered reasonable by the secretary of state.
(b) The secretary of state shall issue a license to any person who holds and presents with the application a valid and subsisting license to operate a collection agency issued by another state or state agency if:
(1) the requirements for the securing of such license were, at the time of issuance, substantially the same or equal to the requirements imposed by this chapter;
(2) the state concerned extends reciprocity under similar circumstances to licensed collection agencies of this state; and
(3) the application is accompanied by the fees and financial bonding requirements as provided in this chapter.
(c) In the event of the death of an individual licensee, the dissolution of a licensee partnership by death or operation of law, or the termination of employment of the active manager if the licensee is a firm, partnership, limited liability company, or corporation, upon a showing that the bonding requirements provided for in this chapter are complied with, the secretary of state shall issue, without a fee, a provisional license to the personal representative of the deceased, the personal representative's appointee, the surviving partner, the firm, the limited liability company, or the corporation, as the case may be, which shall be for the following purposes only and shall expire at the following times:
(1) A provisional license issued to a personal representative or a personal representative's appointee expires one (1) year from the date of the issuance and shall not be subject to renewal. The authority of the provisional license so issued shall be limited to such activities as may be necessary to terminate the business of the former licensee.
(2) All other provisional licenses expire three (3) months from the date of issuance unless the provisional licensee, within this period, can meet the requirements for a full license as provided in this chapter.
(d) A nonresident collection agency that has only incidental contact with a debtor is not required to be licensed under this chapter. As used in this subsection, "incidental contact" means contact on behalf of nonresident creditors using interstate communications, including telephone, mail service, or facsimile transmissions.
