HB 1332-1_ Filed 02/01/2010, 08:57 Bardon


Text Box


    PREVAILED      Roll Call No. _______
    FAILED        Ayes _______
    WITHDRAWN        Noes _______
    RULED OUT OF ORDER


[

HOUSE MOTION ____

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MR. SPEAKER:

    I move that House Bill 1332 be amended to read as follows:

SOURCE: Page 1, line 1; (10)MO133202.1. -->     Page 1, between the enacting clause and line 1, begin a new paragraph and insert:
SOURCE: IC 4-2-6-15; (10)MO133202.1. -->     "SECTION 1. IC 4-2-6-15 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 15. (a) A state officer may not use the state officer's name in a publication or a media broadcast paid for entirely or in part with:
        (1) money from the securities division enforcement account established under IC 23-19-6-1(f); or
        (2) appropriations from the state general fund made under IC 23-19-6-1(f).
    (b) This section does not prohibit a state officer from using the title of the office that the state officer holds in a publication or a media broadcast described in subsection (a).

SOURCE: IC 23-2-5-11; (10)MO133202.2. -->     SECTION 2. IC 23-2-5-11, AS AMENDED BY P.L.156-2009, SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 11. (a) The commissioner may do the following:
        (1) Adopt rules under IC 4-22-2 to implement this chapter.
        (2) Make investigations and examinations:
            (A) in connection with any application for licensure under this chapter or with any license already granted; or
            (B) whenever it appears to the commissioner, upon the basis of a complaint or information, that reasonable grounds exist for the belief that an investigation or examination is necessary

or advisable for the more complete protection of the interests of the public.
        (3) Charge as costs of investigation or examination all reasonable expenses, including a per diem prorated upon the salary of the commissioner or employee and actual traveling and hotel expenses. All reasonable expenses are to be paid by the party or parties under investigation or examination if the party has violated this chapter.
        (4) Issue notices and orders, including cease and desist notices and orders, after making an investigation or examination under subdivision (2). The commissioner may also bring an action on behalf of the state to enjoin a person from violating this chapter. The commissioner shall notify the person that an order or notice has been issued, the reasons for it, and that a hearing will be set not later than fifteen (15) business days after the commissioner receives a written request from the person requesting a hearing if the original order issued by the commissioner was a summary suspension, summary revocation, or denial of a license and not later than forty-five (45) business days after the commissioner receives a written request from the person requesting a hearing for all other orders.
        (5) Sign all orders, official certifications, documents, or papers issued under this chapter or delegate the authority to sign any of those items to a deputy.
        (6) Hold and conduct hearings.
        (7) Hear evidence.
        (8) Conduct inquiries with or without hearings.
        (9) Receive reports of investigators or other officers or employees of the state of Indiana or of any municipal corporation or governmental subdivision within the state.
        (10) Administer oaths, or cause them to be administered.
        (11) Subpoena witnesses, and compel them to attend and testify.
        (12) Compel the production of books, records, and other documents.
        (13) Order depositions to be taken of any witness residing within or without the state. The depositions shall be taken in the manner prescribed by law for depositions in civil actions and made returnable to the commissioner.
        (14) Order that each witness appearing under the commissioner's order to testify before the commissioner shall receive the fees and mileage allowances provided for witnesses in civil cases.
        (15) Provide interpretive opinions or issue determinations that the commissioner will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. The commissioner may adopt rules

to establish fees for individuals requesting an interpretive opinion or a determination under this subdivision. A person may not request an interpretive opinion or a determination concerning an activity that:
            (A) occurred before; or
            (B) is occurring on;
        the date the opinion or determination is requested.
        (16) Subject to subsection (f), designate a multistate automated licensing system and repository, established and operated by a third party, to serve as the sole entity responsible for:
            (A) processing applications for:
                (i) licenses under this chapter; and
                (ii) renewals of licenses under this chapter; and
            (B) performing other services that the commissioner determines are necessary for the orderly administration of the division's licensing system.
        A multistate automated licensing system and repository described in this subdivision may include the Nationwide Mortgage Licensing System and Registry established by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The commissioner may take any action necessary to allow the division to participate in a multistate automated licensing system and repository.
    (b) If a witness, in any hearing, inquiry, or investigation conducted under this chapter, refuses to answer any question or produce any item, the commissioner may file a written petition with the circuit or superior court in the county where the hearing, investigation, or inquiry in question is being conducted requesting a hearing on the refusal. The court shall hold a hearing to determine if the witness may refuse to answer the question or produce the item. If the court determines that the witness, based upon the witness's privilege against self-incrimination, may properly refuse to answer or produce an item, the commissioner may make a written request that the court grant use immunity to the witness. Upon written request of the commissioner, the court shall grant use immunity to a witness. The court shall instruct the witness, by written order or in open court, that:
        (1) any evidence the witness gives, or evidence derived from that evidence, may not be used in any criminal proceedings against that witness, unless the evidence is volunteered by the witness or is not responsive to a question; and
        (2) the witness must answer the questions asked and produce the items requested.
A grant of use immunity does not prohibit evidence that the witness gives in a hearing, investigation, or inquiry from being used in a prosecution for perjury under IC 35-44-2-1. If a witness refuses to give the evidence after the witness has been granted use immunity, the court

may find the witness in contempt.
    (c) In any prosecution, action, suit, or proceeding based upon or arising out of this chapter, the commissioner may sign a certificate showing compliance or noncompliance with this chapter by any person. This shall constitute prima facie evidence of compliance or noncompliance with this chapter and shall be admissible in evidence in any action at law or in equity to enforce this chapter.
    (d) If:
        (1) a person disobeys any lawful:
            (A) subpoena issued under this chapter; or
            (B) order or demand requiring the production of any books, accounts, papers, records, documents, or other evidence or information as provided in this chapter; or
        (2) a witness refuses to:
            (A) appear when subpoenaed;
            (B) testify to any matter about which the witness may be lawfully interrogated; or
            (C) take or subscribe to any oath required by this chapter;
the circuit or superior court of the county in which the hearing, inquiry, or investigation in question is held, if demand is made or if, upon written petition, the production is ordered to be made, or the commissioner or a hearing officer appointed by the commissioner, shall compel compliance with the lawful requirements of the subpoena, order, or demand, compel the production of the necessary or required books, papers, records, documents, and other evidence and information, and compel any witness to attend in any Indiana county and to testify to any matter about which the witness may lawfully be interrogated, and to take or subscribe to any oath required.
    (e) If a person fails, refuses, or neglects to comply with a court order under this section, the person shall be punished for contempt of court.
    (f) The commissioner's authority to designate a multistate automated licensing system and repository under subsection (a)(16) is subject to the following:
        (1) The commissioner 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 commissioner 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 commissioner.

SOURCE: IC 23-2-5-11.5; (10)MO133202.3. -->     SECTION 3. IC 23-2-5-11.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY

1, 2010]: Sec. 11.5. (a) If the commissioner believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a rule adopted or order issued under this chapter, the commissioner may maintain an action in the circuit or superior court in the county where the investigation or inquiry in question is being conducted to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter.
    (b) In an action under this section and on a proper showing, the court may:
        (1) issue a permanent or temporary injunction, restraining order, or declaratory judgment;
        (2) order other appropriate or ancillary relief, which may include:
            (A) an asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator;
            (B) ordering a receiver or conservator appointed under clause (A) to:
                (i) take charge and control of a respondent's property, including investment accounts and accounts in a depository institution, rents, and profits;
                (ii) collect debts; and
                (iii) acquire and dispose of property;
            (C) imposing a civil penalty of 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 chapter or a rule adopted or order issued under this chapter; 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 chapter.
    (d) Penalties collected under this section shall be deposited in the securities division enforcement account created under IC 23-19-6-1(f).

SOURCE: IC 23-2-5-20; (10)MO133202.4. -->     SECTION 4. IC 23-2-5-20, AS AMENDED BY P.L.156-2009, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 20. (a) A person shall not, in connection with a contract for the services of a loan broker, either directly or indirectly, do any of the following:
        (1) Employ any device, scheme, or artifice to defraud.
        (2) Make any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of circumstances under which they are made, not misleading.
        (3) Engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person.
        (4) Collect or solicit any consideration, except a bona fide third party fee, in connection with a residential mortgage loan until the loan has been closed.
        (5) Receive any funds if the person knows that the funds were generated as a result of a fraudulent act.
        (6) File or cause to be filed with a county recorder any document that the person knows:
            (A) contains:
                (i) a misstatement; or
                (ii) an untrue statement;
            of a material fact; or
            (B) omits a statement of a material fact that is necessary to make the statements that are made, in the light of circumstances under which they are made, not misleading.
        (7) Knowingly release or disclose the unencrypted, unredacted personal information of one (1) or more borrowers or prospective borrowers, unless the personal information is used in an activity authorized by the borrower or prospective borrower under one (1) or more of the following circumstances:
            (A) The personal information is:
                (i) included on an application form or another form; or
                (ii) transmitted as part of an application process or an enrollment process.
            (B) The personal information is used to obtain a consumer report (as defined in IC 24-5-24-2) for an applicant for credit.
            (C) The personal information is used to establish, amend, or terminate an account, a contract, or a policy, or to confirm the accuracy of the personal information.
        However, personal information allowed to be disclosed under this subdivision may not be printed in whole or in part on a postcard or other mailer that does not require an envelope, or in a manner that makes the personal information visible on an envelope or a mailer without the envelope or mailer being opened.
        (8) Engage in any reckless or negligent activity allowing the release or disclosure of the unencrypted, unredacted personal information of one (1) or more borrowers or prospective borrowers. An activity described in this subdivision includes an action prohibited by section 18(d) of this chapter.
        (9) Knowingly bribe, coerce, or intimidate another person to

corrupt or improperly influence the independent judgment of a real estate appraiser with respect to the value of any real estate offered as security for a residential mortgage loan, as prohibited by section 9.1(d) of this chapter.
        (10) Violate any of the following:
            (A) The federal Truth in Lending Act (15 U.S.C. 1601 et seq.).
            (B) The federal Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.), as amended.
            (C) The federal Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.).
            (D) Any other federal law or regulation concerning residential mortgage lending.
    (b) A person who commits an act described in subsection (a) is subject to sections 10, 11.5, 14, 15, and 16 of this chapter.

SOURCE: IC 23-19-4-6; (10)MO133202.5. -->     SECTION 5. IC 23-19-4-6, AS ADDED BY P.L.27-2007, SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 6. (a) A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing an application and a consent to service of process complying with IC 23-19-6-11, and paying the fee specified in section 10 of this chapter and any reasonable fees charged by the designee of the commissioner for processing the filing. The application must contain:
        (1) the information or record required for the filing of a uniform application; and
        (2) upon request by the commissioner, any other financial or other information or record that the commissioner determines is appropriate.
    (b) If the information or record contained in an application filed under subsection (a) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
     (c) At the time of application for an initial registration as an investment adviser representative under this article, the commissioner shall require each applicant to submit fingerprints for a national criminal history background check (as defined in IC 10-13-3-12) by the Federal Bureau of Investigation, for use by the commissioner in determining whether the applicant should be denied registration under this chapter for any reason set forth in section 12(d) of this chapter. The applicant shall pay any fees or costs associated with the fingerprints and background check required under this subsection.
    (c) (d) If an order is not in effect and a proceeding is not pending under section 12 of this chapter, registration becomes effective at noon on the forty-fifth day after a completed application is filed, unless the registration is denied. A rule adopted or order issued under this article may set an earlier effective date or may defer the effective date until

noon on the forty-fifth day after the filing of any amendment completing the application.
    (d) (e) A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect under section 12 of this chapter, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this article, by paying the fee specified in section 10 of this chapter, and by paying costs charged by the designee of the commissioner for processing the filings.
    (e) (f) A rule adopted or order issued under this article may impose other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996. An order issued under this article may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.

SOURCE: IC 23-19-6-1; (10)MO133202.6. -->     SECTION 6. IC 23-19-6-1, AS ADDED BY P.L.27-2007, SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 1. (a) This article shall be administered by a division of the office of the secretary of state. The secretary of state shall appoint a securities commissioner who shall be responsible for the direction and supervision of the division and the administration of 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) 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. Subject to IC 4-2-6-15, 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.

SOURCE: IC 23-19-6-12; (10)MO133202.7. -->     SECTION 7. IC 23-19-6-12 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 12. The commissioner may award, from any amount imposed as a penalty under this article and recovered by the securities division, a percentage, not to exceed ten percent (10%) and as considered appropriate by the commissioner, of the amount recovered, to any person who provided information leading to the imposition of the penalty. Any determination under this section, including whether to make a payment, to whom to make a payment, or in what amount to make a payment, is in the sole

discretion of the commissioner. However, a payment may not be made under this section to an employee of the securities division. A determination under this section is final and is not subject to judicial review.".
    Renumber all SECTIONS consecutively.
    (Reference is to HB 1332 as printed January 29, 2010.)

________________________________________

Representative Bardon


MO133202/DI 101     2010