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HB559 INTRODUCED
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HB559
QNPHN45-1
By Representative Underwood
RFD: State Government
First Read: 03-Mar-26
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QNPHN45-1 03/02/2026 JWB (L)JWB 2026-995
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First Read: 03-Mar-26
SYNOPSIS:
This bill would establish the Market
Accountability Compensation Fund in the State Treasury
for the purpose of providing monetary relief to victims
of investment fraud.
This bill would authorize the Alabama Securities
Commission to use the fund to provide restitution
assistance to victims of investment fraud who cannot
recover restitution from the perpetrator.
This bill would establish limits on the amount
that may be paid from the fund to victims of investment
fraud.
This bill would authorize the commission to have
subrogation rights to the restitution ordered for a
victim that has received a restitution assistance
award.
This bill would provide criminal penalties for
anyone who files a fraudulent claim or provides
misleading information to the commission regarding a
claim for restitution assistance.
This bill would also authorize the commission to
enforce this act.
A BILL
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A BILL
TO BE ENTITLED
AN ACT
Relating to fraud victim compensation; to create the
Market Accountability Compensation Fund in the State Treasury;
to provide that certain monies are transferred to the fund; to
authorize the Alabama Securities Commission to use the fund to
provide assistance to victims of investment fraud who cannot
recover from the perpetrator; to authorize the transfer of
certain monies to the fund; to authorize the commission to
have subrogation rights to the restitution ordered for those
who receive restitution assistance awards; and to provide
criminal penalties for certain violations.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as
the Alabama Market Accountability Compensation Fund Act.
Section 2. For purposes of this act, the following
terms have the following meanings:
(1) CLAIMANT. An individual who files an application
for restitution pursuant to this act.
(2) COMMISSION. The Alabama Securities Commission.
(3) FINAL ORDER. A final administrative order issued by
the commission, or a final court order in a civil or criminal
proceeding either initiated by the commission or referred by
the commission to one of the offices of a United States
Attorney.
(4) RESTITUTION ASSISTANCE AWARD. An award of funds by
the commission pursuant to this act.
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the commission pursuant to this act.
(5) SECURITIES VIOLATION. A violation of Section
8-6-17, Code of Alabama 1975, or any violation of federal law
directly related to circumstances that would be a violation of
Section 8-6-17, Code of Alabama 1975. The federal violation
must be initiated or referred to an office of a United States
Attorney by the commission. Regardless of whether the
violation is prosecuted under state or federal law, there must
be a restitution order, judgment, or administrative
restitution finding.
(6) VULNERABLE ADULT. An individual who is any of the
following:
a. Sixty-five years of age or older.
b. Eighteen years of age or older and whose behavior
indicates that the individual is mentally incapable of caring
for himself or herself and his or her interests without
serious consequences. If the individual is subject to the
jurisdiction of the juvenile court, the individual shall not
be considered a vulnerable adult.
c. Eighteen years of age, who, due to physical or
mental impairment, cannot protect himself or herself from
abuse, neglect, exploitation, sexual abuse, or emotional abuse
by others, and has no guardian or other person willing, able,
and available to assume the supervision necessary under the
circumstances. If the individual is subject to the
jurisdiction of the juvenile court, the individual shall not
be considered a vulnerable adult.
Section 3. (a) The Market Accountability Compensation
Fund is created in the State Treasury.
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Fund is created in the State Treasury.
(b) Monies contained in the fund may only be expended
to provide monetary relief to victims of investment fraud who
are entitled to monetary damages or restitution and who cannot
recover the funds from the perpetrator of the fraud, as
provided in this act.
(c)(1) The commission shall transfer an initial amount
of two million five hundred thousand dollars ($2,500,000) from
the Alabama Securities Commission Fund in the State Treasury
to the Market Accountability Compensation Fund.
(2) The commission may make transfers of additional
monies from the Alabama Securities Commission Fund to the
Market Accountability Compensation Fund in amounts not
exceeding two million two hundred fifty thousand dollars
($2,250,000).
(3) The total amount of monies in the Market
Accountability Compensation Fund may not at any time exceed
two million five hundred thousand dollars ($2,500,000).
(d)(1) At the end of any fiscal year, any unexpended or
unencumbered monies contributed to or deposited in the fund
from any source, except appropriations from other state funds,
shall remain in the fund.
(2) Any funds recovered by the commission pursuant to
this act shall be deposited into the fund.
Section 4. (a) Either of the following may submit a
claim for a restitution assistance award in a manner and form
prescribed by the commission:
(1) A named victim in a restitution award in a final
order.
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order.
(2) Any other person with lawful authority to act on
behalf of the named victim in a restitution award in a final
order.
(b) The claimant must submit the application within one
year after the date of the final order awarding restitution to
the victim.
(c) Except as provided in subsection (d), the maximum
amount that may be awarded to a claimant is the lesser of
twenty-five thousand dollars ($25,000) or 25 percent of the
amount of unpaid restitution awarded by the court in the final
order.
(d) If the claimant is a vulnerable person, the maximum
amount that may be awarded is the lesser of fifty thousand
dollars ($50,000) or 50 percent of the amount of the unpaid
restitution awarded by the court in the final order.
(e)(1) Payments to separate claimants for any single
final order are limited in the aggregate to two hundred fifty
thousand dollars ($250,000), regardless of the number of
claims or number of claimants.
(2) If there are multiple claimants, the restitution
assistance award may be paid in prorated amounts based upon
the percentage of the total amount that each claimant was
entitled to due to the final order. Regardless of whether the
amount in the restitution assistance award is prorated, the
award is subject to the limits of subsections (c) and (d).
(f) The commission is not required to award a claimant
any funds. Subject to the limits imposed by subsections (c)
and (d), the commission may make a restitution assistance
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and (d), the commission may make a restitution assistance
award in any amount the commission determines is appropriate.
Section 5. The commission may not pay a claimant a
restitution assistance award if any of the following apply:
(1) The claimant does not meet the requirements set out
in this act or a rule issued by the commission.
(2) The claim for restitution was made dishonestly or
fraudulently.
(3) The claimant has a conviction for a felonious
offense involving fraud or theft.
(4) The named victim has received the full amount of
restitution owed from the individual ordered to pay
restitution in the final order before the application for the
restitution assistance award was filed.
(5) The named victim sustained the monetary injury
primarily as a result of any of the following:
a. Participating or assisting in a securities
violation.
b. Attempting to commit or committing a securities
violation.
c. Profiting or attempting to profit from a securities
violation.
Section 6. (a) If an award of restitution in a final
order is overturned after the commission has made a
restitution assistance award regarding the case, the
commission may recover the amount paid in restitution
assistance award from the claimant by issuing an
administrative order or filing a civil action for return of
the awarded funds.
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the awarded funds.
(b) A claimant convicted of any crime in connection
with a claim made pursuant to this act or any felony involving
fraud or theft shall forfeit any restitution assistance award
paid to the claimant. The commission may file an
administrative order or civil action for the return of any
forfeited funds.
Section 7. (a) The commission shall subrogate the
rights of the claimant awarded restitution assistance to the
extent of the amount that was paid in the restitution
assistance award. The subrogation rights are against the
individual ordered to pay restitution to the victim for the
securities violation.
(b) The commission may file a motion for subrogation
with the court that issued the final order. The motion shall
include all of the following:
(1) A notification to the court regarding the
restitution assistance award.
(2) A statement of the amount that was awarded in the
restitution assistance award.
(3) The provisions of this section that authorize the
commission's right of subrogation.
(c) The defendant who is paying restitution to a
claimant who has been awarded restitution assistance shall
direct restitution payments to the commission once the
claimant has been paid in full, including the amount of the
restitution assistance award.
(d) Any order by a court of competent jurisdiction
regarding subrogation by the commission shall be treated the
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regarding subrogation by the commission shall be treated the
same as a restitution order by the court and shall not expire.
Section 8. (a) A claimant must refund the commission
any amount of restitution received that, when combined with
the restitution assistance award, exceeds the restitution
awarded in the final order.
(b) The statute of limitations to file a civil action
to enforce this provision shall be five years from the date of
discovery by the commission that the claimant received an
amount greater than the restitution order.
Section 9. (a) If payment of restitution assistance
awards would result in a balance below two hundred fifty
thousand dollars ($250,000) in the fund, the commission may
suspend payment of restitution assistance awards or prorate
payment of restitution assistance awards until the commission
determines that a sufficient balance has been restored to the
fund.
(b) A restitution assistance award made by the
commission pursuant to this act shall not be subject to
execution, attachment, garnishment, or any other process
except for processes brought by or on behalf of the State of
Alabama.
Section 10. (a) A person who files a fraudulent claim
or provides misleading information to the commission regarding
a claim pursuant to this act shall be guilty of a Class C
felony.
(b)(1) The commission shall have jurisdiction to
enforce this act. The commission may carry out investigations
of violations of this act pursuant to Section 8-6-15, Code of
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of violations of this act pursuant to Section 8-6-15, Code of
Alabama 1975.
(2) The commission shall provide the district attorney
of the proper county any evidence of a crime committed
pursuant to subsection (a). If the district attorney neglects
or refuses to prosecute a violation under this act, the
commission may proceed with all the rights, privileges, and
powers conferred by law upon district or court attorneys,
including the power to appear before grand juries and to
interrogate witnesses before the grand juries.
Section 11. This act shall become effective on October
1, 2026.
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