NASAA Members Approve Model Act to Create Restitution Assistance Funds for Victims of Securities Violations

WASHINGTON, D.C. (May 18, 2021) – The North American Securities Administrators Association (NASAA) today announced that its membership has voted to approve a model act for use by jurisdictions that are considering establishing restitution assistance funds for victims of securities violations.

The NASAA Model Act to Create a Restitution Assistance Fund for Victims of Securities Violations may be adopted as legislation or implemented by regulation. Whether adoption is by legislation or regulation depends on individual jurisdictions.

The model act provides states a way to provide financial assistance to victims of securities law violations who are awarded restitution but do not receive full payment. The model act establishes a state securities restitution assistance fund, outlines eligibility requirements for victims seeking restitution assistance, sets payment caps on the amount of restitution assistance awards, prohibits and forfeits awards in certain circumstances, and provides for recovery mechanisms. The model act also calls for restitution assistance awards to be doubled for victims of securities violations who meet certain criteria to be considered vulnerable persons, whether by age or other factors.

“State securities regulators are focused on protecting the interests of investors and this model act provides states with one more a tool to help securities fraud victims on their way to financial recovery,” said Lisa A. Hopkins, NASAA President and West Virginia Senior Deputy Securities Commissioner.

The model act draws upon similar legislation in Indiana, Montana, Vermont, Kansas and Maine. Hopkins said Indiana and Montana enacted this type of legislation nearly a decade ago and have reported that their restitution assistance programs are successful. For example, since the inception, Indiana has issued approximately $1 million in restitution assistance awards to 102 claimants, and Montana has awarded approximately $1.8 million to 134 claimants. The average age of a restitution recipient was 64 years old in Indiana, and 82% of restitution recipients were over 60 years old in Montana.

The model act was developed by NASAA’s Board-level State Legislation Committee led by Montana Deputy Securities Commissioner Lynne Egan, and its Restitution Assistance Working Group, led by Karla Black, Deputy Securities Administrator and General Counsel with the Maine Office of Securities. “We look forward to the model act being enacted and implemented in jurisdictions throughout the United States,” Egan said.

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