AB 529

Current law includes numerous provisions prohibiting fraud, in various forms,

in connection with securities transactions or the offering or sale of securities. These

provisions include making any untrue statement of a material fact or omitting a

material fact necessary to make a statement not misleading in connection with the

offer, sale, or purchase of a security; engaging in market manipulation; publishing,

circulating, or using false advertising; and making material false or misleading

statements or misleading omissions in documents filed with the Division of

Securities in the Department of Financial Institutions (division). Broker-dealers

and investment advisers also may not engage in fraud or employ manipulative,

deceptive, or fraudulent devices.

Under current law, a person who violates the state's securities laws may be

subject to criminal liability or civil liability or both. A person who willfully violates

the state's securities laws, with certain exceptions, is guilty of a Class H felony,

punishable by a maximum fine of $10,000 or a maximum term of imprisonment of

six years or both. The division may refer violations for criminal prosecution to the

attorney general or a district attorney. A person may also be subject to a civil

enforcement proceeding for violating the state's securities laws. The division may

bring a civil enforcement action in circuit court for securities law violations or may

refer the matter to the attorney general or a district attorney to bring such an action.

The division may also issue an order relating to securities law violations and, upon

request, must conduct an administrative hearing on the order in which findings of

fact and conclusions of law are recorded. In a civil enforcement proceeding, the court

in a circuit court proceeding or the division in an administrative proceeding may

impose a civil penalty of not more than $5,000 for a single violation or not more than

$250,000 for more than one violation.

This bill creates a penalty enhancer for violations of the state's securities laws.

If a person is convicted of a crime for violating the state's securities laws and the

crime is committed against another person who is at least 65 years of age, for each

such offense the maximum fine may be increased by not more than $5,000 and the

maximum term of imprisonment may be increased by not more than five years. In

a civil enforcement proceeding, the court in a circuit court proceeding or the division

in an administrative proceeding may impose a civil penalty of not more than $10,000

for a single violation, or not more than $500,000 for more than one violation, if the

violation is against another person who is at least 65 years of age when the violation

occurs. The fact that the defendant did not know the age of the victim, or reasonably

believed the victim was not at least 65 years of age, is not a defense to this penalty

enhancement.

Under current law, in a civil enforcement proceeding before the circuit court,

the court may order a person who violates the state's securities laws to pay

restitution, to disgorge profits, and to pay prejudgment and postjudgment interest,