Nevada Legislature Mulls Creation Of Fund For Victims Of Securities Fraud

It is an odd-numbered year and this means that the Nevada legislature is back in Carson City for its 82nd session.  One of the bills that it will be considering is AB 67 which would create a restitution fund for some, but not all, victims of securities fraud.  The bill would authorize persons to whom a court has ordered restitution pursuant to NRS 90.640 to apply for compensation from the fund.  That statute empowers a Nevada District Court (the state trial court) to grant or impose a wide variety of legal and equitable remedies, including restitution, in an action brought by the Deputy of Securities appointed by the Nevada Secretary of State.  NRS 90.215 & NRS 225.060.  

This leaves out a number of other victims who have been awarded restitution.  For example, NRS 90.650 authorizes restitutionary awards in criminal cases.  Also, it appears that victims who receive restitution awards in courts of other jurisdictions or in civil actions will not be able to obtain restitution.

The fund will be funded by moneys recovered by the Deputy of Securities (aka Administrator) in enforcement actions under the Nevada's securities act, NRS chapter 90.  The bill provides that the State of Nevada will be immediately subrogated in the amount of the award to any right of action to recover any unpaid restitution, and that right of subrogation may be diminished for attorney’s fees and other costs of litigation in obtaining that recovery.