The North American Securities Administrators Association (NASAA) is proposing model legislation to help states create their own harmed investor assistance funds.
The group of regulators has published proposed model legislation that establishes restitution assistance funds for victims of securities law violations. The proposed model is based on existing legislation in several states including Indiana, Montana, Vermont, Kansas and Maine.
“The intent of this model legislation is to provide financial assistance to victims of securities law violations who were awarded restitution but have not received full payment,” said Christopher Gerold, president of NASAA and chief of the New Jersey Bureau of Securities.
Among other provisions, the proposal sets out a framework for setting up a restitution assistance fund, including eligibility requirements, caps on the size of restitution assistance awards (US$25,000 or US$50,000 for vulnerable investors).
“In many cases, victims of securities fraud are only able to recover pennies on the dollar. This model legislation would give state securities regulators the ability to provide greater financial relief to victims, which is particularly important to seniors and other vulnerable adults living on a fixed income,” Gerold said.
NASAA noted that since the launch of its fund in 2010, Indiana — the first state to introduce an investor restitution assistance fund — has paid approximately US$1 million to over 100 investors.
The proposed model will be voted on by the regulators that make up NASAA, likely at its next annual meeting in September.