IC 23-19-6
Chapter 6. Administration and Judicial Review
IC 23-19-6-1 Securities division; securities commissioner; unlawful use of
nonpublic information; investor education initiatives; securities
division enforcement account; securities restitution fund;
assistance from attorney general; police powers
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. Notwithstanding IC 9-23-6-4, IC 23-2-2.5-34,
IC 23-2-2.5-43, IC 23-2-5-7, IC 23-19-4-12, IC 25-11-1-15, and this
chapter, five percent (5%) of funds received after June 30, 2010, for
deposit in the enforcement account shall instead be deposited in the
securities restitution fund established under IC 23-20-1-26. Subject
to IC 4-2-6-15, the funds deposited 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. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.10.
IC 23-19-6-2 Investigations; subpoenas; depositions; relief; hearings; use
immunity; certificate of compliance or noncompliance; witness fees
Sec. 2. (a) The commissioner may:
(1) conduct public or private investigations within or outside
this state which the commissioner considers necessary or
appropriate to determine whether a person has violated, is
violating, or is about to violate this article or a rule adopted or
order issued under this article, or to aid in the enforcement of
this article or in the adoption of rules and forms under this
article;
(2) require or permit a person to testify, file a statement, or
produce a record, under oath or otherwise as the commissioner
determines, as to all the facts and circumstances concerning a
matter to be investigated or about which an action or proceeding
is to be instituted; and
(3) publish a record concerning an action, proceeding, or an
investigation under, or a violation of, this article or a rule
adopted or order issued under this article if the commissioner
determines it is necessary or appropriate in the public interest
and for the protection of investors.
(b) For the purpose of an investigation under this article, the
commissioner or the commissioner's designated officer may
administer oaths and affirmations, subpoena witnesses, seek
compulsion of attendance, take evidence, require the filing of
statements, and require the production of any records that the
commissioner considers relevant or material to the investigation.
Upon order of the commissioner or a hearing officer appointed by the
commissioner in any hearing, depositions may be taken in the
manner prescribed by law for depositions in civil actions and made
returnable to the commissioner or a hearing officer appointed by the
commissioner.
(c) If a person does not appear or refuses to testify, file a
statement, or produce records, or otherwise does not obey a subpoena
as required by this article, the commissioner or hearing officer
appointed by the commissioner may apply to the circuit or superior
court in the county where the hearing, investigation, or inquiry in
question is being conducted to enforce compliance. The court may:
(1) hold the person in contempt;
(2) order the person to appear before the commissioner or
hearing officer appointed by the commissioner;
(3) order the person to testify about the matter under
investigation or in question;
(4) order the production of records;
(5) grant injunctive relief, including restricting or prohibiting
the offer or sale of securities or the providing of investment
advice;
(6) impose a civil penalty of not more than twenty thousand
dollars ($20,000) for each violation; and
(7) grant any other necessary or appropriate relief.
(d) This section does not preclude a person from applying to the
circuit or superior court in the county where the hearing,
investigation, or inquiry in question is being conducted for relief
from a request to appear, testify, file a statement, produce records, or
obey a subpoena.
(e) If a witness, in any hearing, inquiry, or investigation
conducted under this article, 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
the use of 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.
(f) At the request of the securities regulator of another state or a
foreign jurisdiction, the commissioner may provide assistance if the
requesting regulator states that it is conducting an investigation to
determine whether a person has violated, is violating, or is about to
violate a law or rule of the other state or foreign jurisdiction relating
to securities matters that the requesting regulator administers or
enforces. The commissioner may provide the assistance by using the
authority to investigate and the powers conferred by this section as
the commissioner determines is necessary or appropriate. The
assistance may be provided without regard to whether the conduct
described in the request would also constitute a violation of this
article or other law of this state if occurring in this state. In deciding
whether to provide the assistance, the commissioner may consider
whether the requesting regulator is permitted and has agreed to
provide assistance reciprocally within its state or foreign jurisdiction
to the commissioner on securities matters when requested; whether
compliance with the request would violate or prejudice the public
policy of this state; and the availability of resources and employees
of the commissioner to carry out the request for assistance.
(g) In any prosecution, action, suit, or proceeding based upon or
arising out of or under the provisions of this article, a certificate duly
signed by the commissioner showing compliance or noncompliance
with the provisions of this article, respecting the security in question
or respecting compliance or noncompliance of this article, by any
issuer, broker-dealer, investment advisor, or agent, shall constitute
prima facie evidence of compliance or noncompliance with the
provisions of this article, as the case may be, and shall be admissible
in evidence in any action at law or in equity to enforce this article.
(h) Each witness who shall appear before the commissioner or a
hearing officer appointed by the commissioner by order shall receive
for the witness's attendance the fees and mileage provided for
witnesses in civil cases, which shall be audited and paid by the state
in the same manner as other expenses of the securities division are
audited and paid upon the presentation of proper vouchers sworn to
by the witnesses and approved by the commissioner. However, no
witnesses subpoenaed at the instance of parties other than the
commissioner or a hearing officer appointed by the commissioner
shall be entitled to any fee or compensation from the state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-3 Violations; injunctions; other remedies
Sec. 3. (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 article or a rule adopted or
order issued under this article 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 article or a rule adopted or order issued under this
article, 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 article or a rule adopted
or order issued under this article.
(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 take charge and control of a respondent's
property, including investment accounts and accounts in a
depository institution, rents, and profits; to collect debts; and
to acquire and dispose of property;
(C) imposing a civil penalty 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 article or the predecessor act
or a rule adopted or order issued under this article or the
predecessor act; 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 article.
(d) Penalties collected under this section shall be deposited in the
securities division enforcement account established under section 1
of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-6-4 Violations; investigations; cease and desist orders and other
orders; hearings; civil penalties; appeals; civil contempt; certified
copy of order
Sec. 4. (a) If the commissioner determines 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 article or a rule
adopted or order issued under this article or that a person has
materially aided, is materially aiding, or is about to materially aid an
act, practice, or course of business constituting a violation of this
article or a rule adopted or order issued under this article, the
commissioner may:
(1) investigate and may issue, with or without a prior hearing,
orders and notices as the commissioner determines to be in the
public interest, including cease and desist orders, orders to
show cause, and notices. After notice and hearing, the
commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the legal rate of interest,
directed to a person who has violated this article or a rule or
order under this article;
(2) issue an order denying, suspending, revoking, or
conditioning the exemptions for a broker-dealer under
IC 23-19-4-1(b)(1)(D) or IC 23-19-4-1(b)(1)(F) or an
investment adviser under IC 23-19-4-3(b)(1)(C); or
(3) issue an order under IC 23-19-2-4.
(b) An order under subsection (a) is effective on the date of
issuance. Upon issuance of the order, the commissioner shall
promptly serve each person subject to the order with a copy of the
order and a notice that the order has been entered. The order must
include a statement whether the commissioner will seek a civil
penalty or costs of the investigation, a statement of the reasons for
the order, and notice that, within fifteen (15) days after receipt of a
request in a record from the person, the matter will be scheduled for
a hearing. If a person subject to the order does not request a hearing
and none is ordered by the commissioner within forty-five (45) days
after the date of service of the order, the order, which may include a
civil penalty or costs of the investigation if a civil penalty or costs
were sought in the statement accompanying the order, becomes final
as to that person by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend it until final determination.
(c) If a hearing is requested or ordered under subsection (b), the
hearing must be held not later than fifteen (15) business days after
receipt 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 receipt for all other
orders. A final order may not be issued unless the commissioner
makes findings of fact and conclusions of law in a record. The final
order may make final, vacate, or modify the order issued under
subsection (a).
(d) In a final order under subsection (c), the commissioner may
impose a civil penalty up to ten thousand dollars ($10,000) per
violation. Penalties collected under this section shall be deposited in
the securities division enforcement account established under section
1 of this chapter.
(e) In a final order, the commissioner may charge the cost of an
investigation or proceeding for a violation of this article or a rule
adopted or order issued under this article.
(f) If a petition for judicial review of a final order is not filed in
accordance with section 9 of this chapter, the commissioner may file
a certified copy of the final order with the clerk of a court with
jurisdiction. The order so filed has the same effect as a judgment of
the court and may be recorded, enforced, or satisfied in the same
manner as a judgment of the court.
(g) If a person does not comply with an order under this section,
the commissioner may petition a court with jurisdiction to enforce
the order. The court may not require the commissioner to post a bond
in an action or proceeding under this section. If the court finds, after
service and opportunity for hearing, that the person was not in
compliance with the order, the court may adjudge the person in civil
contempt of the order. The court may impose a further civil penalty
against the person for contempt in an amount not greater than twenty
thousand dollars ($20,000) for each violation and may grant any
other relief the court determines is just and proper in the
circumstances.
(h) The commissioner shall send a certified copy of every final
order that suspends or revokes a person's registration under this
article, or that orders a person who is not registered under this article
to cease and desist from violating this article, to the insurance
commissioner appointed under IC 27-1-1-2. The insurance
commissioner shall act in accordance with IC 27-1-15.6-29.5. As added by P.L.27-2007, SEC.23. Amended by P.L.156-2009,
SEC.24.
IC 23-19-6-5 Rules, forms, and orders; financial statements; interpretive
opinions and determinations; good faith conduct; public hearings
Sec. 5. (a) The commissioner may:
(1) issue forms and orders and, after notice and comment, may
adopt and amend rules necessary or appropriate to carry out this
article and may repeal rules, including rules and forms
governing registration statements, applications, notice filings,
reports, and other records;
(2) by rule, define terms, whether or not used in this article, but
those definitions may not be inconsistent with this article; and
(3) by rule, classify securities, persons, and transactions and
adopt different requirements for different classes.
(b) Under this article, a rule or form may not be adopted or
amended, or an order issued or amended, unless the commissioner
finds that the rule, form, order, or amendment is necessary or
appropriate in the public interest or for the protection of investors
and is consistent with the purposes intended by this article.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1938 (15 U.S.C. 78o(h)) and Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), the commissioner may require that
a financial statement filed under this article be prepared in
accordance with generally accepted accounting principles in the
United States and comply with other requirements specified by rule
adopted or order issued under this article. A rule adopted or order
issued under this article may establish:
(1) subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) and Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), the form and content
of financial statements required under this article;
(2) whether unconsolidated financial statements must be filed;
and
(3) whether required financial statements must be audited by an
independent certified public accountant.
(d) The commissioner may provide interpretative opinions or
issue determinations that the commissioner will not institute a
proceeding or an action under this article against a specified person
for engaging in a specified act, practice, or course of business if the
determination is consistent with this article. The commissioner shall
charge a fee of one hundred dollars ($100) for an interpretative
opinion or determination.
(e) A penalty under this article may not be imposed for, and
liability does not arise from, conduct that is engaged in or omitted in
good faith and reasonably believed to be conforming to a rule, form,
or order of the commissioner under this article.
(f) A hearing in an administrative proceeding under this article
must be conducted in public unless the commissioner finds a
statutory basis that would allow the hearing to be closed to the
public. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.19; P.L.3-2008, SEC.172.
IC 23-19-6-6 Public register of filings; charges
Sec. 6. (a) The commissioner shall maintain, or designate a person
to maintain, a register of applications for registration of securities;
registration statements; notice filings; applications for registration of
broker-dealers, agents, investment advisers, and investment adviser
representatives; notice filings by federal covered investment advisers
that are or have been effective under this article or the predecessor
act; notices of claims of exemption from registration or notice filing
requirements contained in a record; orders issued under this article
or the predecessor act; and interpretative opinions or no-action
determinations issued under this article.
(b) The commissioner shall make all rules, forms, interpretative
opinions, and orders available to the public.
(c) The commissioner shall furnish a copy of a record that is a
public record, or a certification that the public record does not exist,
to a person that so requests. A rule adopted under this article may
establish a reasonable charge for furnishing the record or
certification. A copy of the record certified or a certificate by the
commissioner of a record's nonexistence is prima facie evidence of
a record or its nonexistence. As added by P.L.27-2007, SEC.23.
IC 23-19-6-7 Public records; inspection and copying; confidential records
Sec. 7. (a) Except as otherwise provided in subsection (b), records
obtained by the commissioner or filed under this article, including a
record contained in or filed with a registration statement, application,
notice filing, or report, are public records and are available for
inspection and copying.
(b) The following records are confidential and are not available
for public inspection and copying under subsection (a):
(1) A record obtained by the commissioner in connection with
an audit or inspection under IC 23-19-4-11(d) or an
investigation under section 2 of this chapter.
(2) A part of a record filed in connection with a registration
statement under IC 23-19-3-1 and IC 23-19-3-3 through
IC 23-19-3-5 or a record under IC 23-19-4-11(d) that contains
trade secrets or confidential information if the person filing the
registration statement or report has asserted a claim of
confidentiality or privilege that is authorized by law and
approved by the commissioner.
(3) A record that is not required to be provided to the
commissioner or filed under this article and is provided to the
commissioner only on the condition that the record will not be
subject to public examination or disclosure.
(4) Confidential records received from a person specified in
section 8(a) of this chapter.
(5) Any Social Security number, residential address unless used
as a business address, and residential telephone number unless
used as a business telephone number, contained in a record that
is filed.
(6) A record obtained by the commissioner through a designee
of the commissioner that a rule or order under this article
determines has been:
(A) expunged from the commissioner's records by the
designee; or
(B) determined to be confidential by that designee if the
commissioner finds the determination to be based on
statutory authority.
(c) If disclosure is for the purpose of a civil, administrative, or
criminal investigation, action, or proceeding or to a person specified
in section 8(a) of this chapter, the commissioner may disclose a
record obtained in connection with an audit or inspection under
IC 23-19-4-11(d) or a record obtained in connection with an
investigation under section 2 of this chapter. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.20.
IC 23-19-6-8 Uniformity objective; cooperation with agencies; policies
Sec. 8. (a) The commissioner shall, in its discretion, cooperate,
coordinate, consult, and, subject to section 7 of this chapter, share
records and information with the securities regulator of another state,
Canada, a Canadian province or territory, a foreign jurisdiction, the
Securities and Exchange Commission, the United States Department
of Justice, the Commodity Futures Trading Commission, the Federal
Trade Commission, the Securities Investor Protection Corporation,
a self-regulatory organization, a national or international
organization of securities regulators, a federal or state banking and
insurance regulator, or a governmental law enforcement agency to
effectuate greater uniformity in securities matters among the federal
government, self-regulatory organizations, states, and foreign
governments.
(b) In cooperating, coordinating, consulting, and sharing records
and information under this section and in acting by rule, order, or
waiver under this article, the commissioner shall, in its discretion,
take into consideration in carrying out the public interest the
following general policies:
(1) Maximizing effectiveness of regulation for the protection of
investors.
(2) Maximizing uniformity in federal and state regulatory
standards.
(3) Minimizing burdens on the business of capital formation,
without adversely affecting essentials of investor protection.
(c) The cooperation, coordination, consultation, and sharing of
records and information authorized by this section includes:
(1) establishing or employing one (1) or more designees as a
central depository for registration and notice filings under this
article and for records required or allowed to be maintained
under this article;
(2) developing and maintaining uniform forms;
(3) conducting a joint examination or investigation;
(4) holding a joint administrative hearing;
(5) instituting and prosecuting a joint civil or administrative
proceeding;
(6) sharing and exchanging personnel;
(7) coordinating registrations under IC 23-19-3 and
IC 23-19-4-1 through IC 23-19-4-4 and exemptions under
IC 23-19-2-3;
(8) sharing and exchanging records, subject to section 7 of this
chapter;
(9) formulating rules, statements of policy, guidelines, forms,
and interpretative opinions and releases;
(10) formulating common systems and procedures;
(11) notifying the public of proposed rules, forms, statements of
policy, and guidelines;
(12) attending conferences and other meetings among securities
regulators, which may include representatives of governmental
and private sector organizations involved in capital formation,
considered necessary or appropriate to promote or achieve
uniformity; and
(13) developing and maintaining a uniform exemption from
registration for small issuers, and taking other steps to reduce
the burden of raising investment capital by small businesses. As added by P.L.27-2007, SEC.23.
IC 23-19-6-9 Appeals from orders; transcripts; trial de novo
Sec. 9. (a) An appeal may be taken by:
(1) any issuer, investment adviser, or registered broker-dealer
whose application for registration of an issue of securities may
have been granted or denied, from any final order of the
commissioner respecting that application or registration;
(2) any applicant for registration as a broker-dealer, investment
adviser, or agent of any registered broker-dealer, investment
advisor, or agent, from any final order of the commissioner
affecting the application or registration as a broker-dealer,
investment adviser, or agent;
(3) any person against whom a civil penalty has been imposed
under section 3(b) or 4(d) of this chapter, from the final order
of the commissioner imposing the civil penalty; or
(4) any person who is named a respondent, from any final order
issued by the commissioner under section 2, 3, or 4 of this
chapter;
to the circuit or superior court of Marion County or the county
wherein the person taking the appeal resides or maintains a place of
business.
(b) Within twenty (20) days after the entry of the order, the
commissioner shall be served with:
(1) a written notice of the appeal stating the court to which the
appeal will be taken and the grounds upon which a reversal of
the final order is sought;
(2) a demand in writing for a certified transcript of the record
and of all papers on file in the commissioner's office affecting
or relating to the order; and
(3) a bond in the penal sum of five hundred dollars ($500) to the
state of Indiana with sufficient surety to be approved by the
commissioner, conditioned upon the faithful prosecution of the
appeal to final judgment and the payment of all costs that shall
be adjudged against the appellant.
(c) After the commissioner has been served with the items
specified in subsection (b), the commissioner shall within ten (10)
days make, certify, and deliver to the appellant the transcript, and the
appellant shall within five (5) days file the same and a copy of the
notice of appeal with the clerk of the court, which notice of appeal
shall stand as appellant's complaint, and the commissioner may
appear and file any motion or pleading and form the issue. The cause
shall be entered on the trial calendar for trial de novo and given
precedence over all matters pending in the court.
(d) The court shall receive and consider any pertinent evidence,
whether oral or documentary, concerning the order of the
commissioner from which the appeal is taken. If the order of the
commissioner is reversed, the court shall in its mandate specifically
direct the commissioner as to the commissioner's further action in the
matter, including the making and entering of any order or orders in
connection therewith and the conditions, limitations, or restrictions
to be contained. The commissioner is not barred from revoking or
altering the order for any proper cause that may thereafter accrue or
be discovered. If the order is affirmed, the appellant is not barred
after thirty (30) days from filing a new application if the application
is not otherwise barred or limited. The appeal shall not in any way
suspend the operation of the order appealed from during the
pendency of the appeal unless upon proper order of the court. An
appeal may be taken from the judgment of the court on any appeal on
the same terms and conditions as an appeal is taken in civil actions. As added by P.L.27-2007, SEC.23.
IC 23-19-6-10 Jurisdiction
Sec. 10. (a) IC 23-19-3-1, IC 23-19-3-2, IC 23-19-4-1(a),
IC 23-19-4-2(a), IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-5-1,
IC 23-19-5-6, IC 23-19-5-9, and IC 23-19-5-10 do not apply to a
person that sells or offers to sell a security unless the offer to sell or
the sale is made in Indiana or the offer to purchase or the purchase
is made and accepted in Indiana.
(b) IC 23-19-4-1(a), IC 23-19-4-2(a), IC 23-19-4-3(a),
IC 23-19-4-4(a), IC 23-19-5-1, IC 23-19-5-6, IC 23-19-5-9, and
IC 23-19-5-10 do not apply to a person that purchases or offers to
purchase a security unless the offer to purchase or the purchase is
made in Indiana or the offer to sell or the sale is made and accepted
in Indiana.
(c) For the purpose of this section, an offer to sell or to purchase
a security is made in Indiana, whether or not either party is then
present in Indiana, if the offer:
(1) originates from within Indiana;
(2) is directed by the offeror to a place in Indiana and received
at the place to which it is directed; or
(3) is directed by the offeror to a resident of Indiana.
(d) For the purpose of this section, an offer to purchase or to sell
is accepted in Indiana, whether or not either party is then present in
Indiana, if the acceptance:
(1) is communicated to the offeror in Indiana and the offeree
reasonably believes the offeror to be present in Indiana and the
acceptance is received at the place in Indiana to which it is
directed or to another place in Indiana; and
(2) has not previously been communicated to the offeror, orally
or in a record, outside this state.
(e) An offer to sell or to purchase is not made in Indiana when a
publisher circulates, or there is circulated on the publisher's behalf,
in Indiana a bona fide newspaper or other publication of general,
regular, and paid circulation that is not published in Indiana, or that
is published in Indiana but has had more than two-thirds (2/3) of its
circulation outside Indiana during the previous twelve (12) months,
or when a radio or television program or other electronic
communication originating outside Indiana is received in Indiana. A
radio or television program or other electronic communication is
considered as having originated in Indiana if either the broadcast
studio or the originating source of transmission is located in Indiana,
unless:
(1) the program or communication is syndicated and distributed
from outside Indiana for redistribution to the general public in
Indiana;
(2) the program or communication is supplied by a radio,
television, or other electronic network with the electronic signal
originating from outside Indiana for redistribution to the general
public in Indiana;
(3) the program or communication is an electronic
communication that originates outside Indiana and is captured
for redistribution to the general public in Indiana by a
community antenna or cable, radio, cable television, or other
electronic system; or
(4) the program or communication consists of an electronic
communication that originates in Indiana, but which is not
intended for distribution to the general public in Indiana.
(f) IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-4-5(a),
IC 23-19-5-2, IC 23-19-5-5, and IC 23-19-5-6 apply to a person if the
person engages in an act, practice, or course of business instrumental
in effecting prohibited or actionable conduct in this state, whether or
not either party is then present in this state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-11 Consent to service of process; conduct constituting agent for
service of process; procedures; continuances
Sec. 11. (a) An irrevocable consent to service of process required
by this article must be signed and filed in the form required by a rule
or order under this article. A consent appointing the secretary of state
as the person's agent for service of process in an action or proceeding
against the person, or the person's successor or personal
representative under this article or a rule adopted or order issued
under this article after the consent is filed, has the same force and
validity as if the service were made personally on the person filing
the consent. A person that has filed a consent complying with this
subsection in connection with a previous application for registration
or notice filing need not file an additional consent.
(b) If a person, including a nonresident of this state, engages in an
act, practice, or course of business prohibited or made actionable by
this article or a rule adopted or order issued under this article and the
person has not filed a consent to service of process under subsection
(a), the act, practice, or course of business constitutes the
appointment of the secretary of state as the person's agent for service
of process in an action or proceeding against the person or the
person's successor or personal representative.
(c) Service under subsection (a) or (b) may be made by providing
a copy of the process to the office of the secretary of state, but it is
not effective unless:
(1) the plaintiff, which may be the commissioner, promptly
sends notice of the service and a copy of the process, return
receipt requested, to the respondent at the address set forth in
the consent to service of process or, if a consent to service of
process has not been filed, at the last known address of the
respondent, or takes other reasonable steps to give notice; and
(2) the plaintiff files an affidavit of compliance with this
subsection in the action or proceeding on or before the return
day of the process, if any, or within the time that the court, or
the commissioner in a proceeding before the commissioner,
allows.
(d) Service under subsection (c) may be used in a proceeding
before the commissioner or by the commissioner in a civil action in
which the commissioner is the moving party.
(e) If process is served under subsection (c), the court, or the
commissioner in a proceeding before the commissioner, shall order
continuances as are necessary or appropriate to afford the defendant
or respondent reasonable opportunity to defend. As added by P.L.27-2007, SEC.23.
IC 23-19-6-12 Award of percentage of penalty imposed to person providing
information
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. As added by P.L.114-2010, SEC.11.
IC 23-19-6
Chapter 6. Administration and Judicial Review
IC 23-19-6-1 Securities division; securities commissioner; unlawful use of
nonpublic information; investor education initiatives; securities
division enforcement account; securities restitution fund;
assistance from attorney general; police powers
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. Notwithstanding IC 9-23-6-4, IC 23-2-2.5-34,
IC 23-2-2.5-43, IC 23-2-5-7, IC 23-19-4-12, IC 25-11-1-15, and this
chapter, five percent (5%) of funds received after June 30, 2010, for
deposit in the enforcement account shall instead be deposited in the
securities restitution fund established under IC 23-20-1-26. Subject
to IC 4-2-6-15, the funds deposited 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. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.10.
IC 23-19-6-2 Investigations; subpoenas; depositions; relief; hearings; use
immunity; certificate of compliance or noncompliance; witness fees
Sec. 2. (a) The commissioner may:
(1) conduct public or private investigations within or outside
this state which the commissioner considers necessary or
appropriate to determine whether a person has violated, is
violating, or is about to violate this article or a rule adopted or
order issued under this article, or to aid in the enforcement of
this article or in the adoption of rules and forms under this
article;
(2) require or permit a person to testify, file a statement, or
produce a record, under oath or otherwise as the commissioner
determines, as to all the facts and circumstances concerning a
matter to be investigated or about which an action or proceeding
is to be instituted; and
(3) publish a record concerning an action, proceeding, or an
investigation under, or a violation of, this article or a rule
adopted or order issued under this article if the commissioner
determines it is necessary or appropriate in the public interest
and for the protection of investors.
(b) For the purpose of an investigation under this article, the
commissioner or the commissioner's designated officer may
administer oaths and affirmations, subpoena witnesses, seek
compulsion of attendance, take evidence, require the filing of
statements, and require the production of any records that the
commissioner considers relevant or material to the investigation.
Upon order of the commissioner or a hearing officer appointed by the
commissioner in any hearing, depositions may be taken in the
manner prescribed by law for depositions in civil actions and made
returnable to the commissioner or a hearing officer appointed by the
commissioner.
(c) If a person does not appear or refuses to testify, file a
statement, or produce records, or otherwise does not obey a subpoena
as required by this article, the commissioner or hearing officer
appointed by the commissioner may apply to the circuit or superior
court in the county where the hearing, investigation, or inquiry in
question is being conducted to enforce compliance. The court may:
(1) hold the person in contempt;
(2) order the person to appear before the commissioner or
hearing officer appointed by the commissioner;
(3) order the person to testify about the matter under
investigation or in question;
(4) order the production of records;
(5) grant injunctive relief, including restricting or prohibiting
the offer or sale of securities or the providing of investment
advice;
(6) impose a civil penalty of not more than twenty thousand
dollars ($20,000) for each violation; and
(7) grant any other necessary or appropriate relief.
(d) This section does not preclude a person from applying to the
circuit or superior court in the county where the hearing,
investigation, or inquiry in question is being conducted for relief
from a request to appear, testify, file a statement, produce records, or
obey a subpoena.
(e) If a witness, in any hearing, inquiry, or investigation
conducted under this article, 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
the use of 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.
(f) At the request of the securities regulator of another state or a
foreign jurisdiction, the commissioner may provide assistance if the
requesting regulator states that it is conducting an investigation to
determine whether a person has violated, is violating, or is about to
violate a law or rule of the other state or foreign jurisdiction relating
to securities matters that the requesting regulator administers or
enforces. The commissioner may provide the assistance by using the
authority to investigate and the powers conferred by this section as
the commissioner determines is necessary or appropriate. The
assistance may be provided without regard to whether the conduct
described in the request would also constitute a violation of this
article or other law of this state if occurring in this state. In deciding
whether to provide the assistance, the commissioner may consider
whether the requesting regulator is permitted and has agreed to
provide assistance reciprocally within its state or foreign jurisdiction
to the commissioner on securities matters when requested; whether
compliance with the request would violate or prejudice the public
policy of this state; and the availability of resources and employees
of the commissioner to carry out the request for assistance.
(g) In any prosecution, action, suit, or proceeding based upon or
arising out of or under the provisions of this article, a certificate duly
signed by the commissioner showing compliance or noncompliance
with the provisions of this article, respecting the security in question
or respecting compliance or noncompliance of this article, by any
issuer, broker-dealer, investment advisor, or agent, shall constitute
prima facie evidence of compliance or noncompliance with the
provisions of this article, as the case may be, and shall be admissible
in evidence in any action at law or in equity to enforce this article.
(h) Each witness who shall appear before the commissioner or a
hearing officer appointed by the commissioner by order shall receive
for the witness's attendance the fees and mileage provided for
witnesses in civil cases, which shall be audited and paid by the state
in the same manner as other expenses of the securities division are
audited and paid upon the presentation of proper vouchers sworn to
by the witnesses and approved by the commissioner. However, no
witnesses subpoenaed at the instance of parties other than the
commissioner or a hearing officer appointed by the commissioner
shall be entitled to any fee or compensation from the state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-3 Violations; injunctions; other remedies
Sec. 3. (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 article or a rule adopted or
order issued under this article 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 article or a rule adopted or order issued under this
article, 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 article or a rule adopted
or order issued under this article.
(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 take charge and control of a respondent's
property, including investment accounts and accounts in a
depository institution, rents, and profits; to collect debts; and
to acquire and dispose of property;
(C) imposing a civil penalty 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 article or the predecessor act
or a rule adopted or order issued under this article or the
predecessor act; 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 article.
(d) Penalties collected under this section shall be deposited in the
securities division enforcement account established under section 1
of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-6-4 Violations; investigations; cease and desist orders and other
orders; hearings; civil penalties; appeals; civil contempt; certified
copy of order
Sec. 4. (a) If the commissioner determines 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 article or a rule
adopted or order issued under this article or that a person has
materially aided, is materially aiding, or is about to materially aid an
act, practice, or course of business constituting a violation of this
article or a rule adopted or order issued under this article, the
commissioner may:
(1) investigate and may issue, with or without a prior hearing,
orders and notices as the commissioner determines to be in the
public interest, including cease and desist orders, orders to
show cause, and notices. After notice and hearing, the
commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the legal rate of interest,
directed to a person who has violated this article or a rule or
order under this article;
(2) issue an order denying, suspending, revoking, or
conditioning the exemptions for a broker-dealer under
IC 23-19-4-1(b)(1)(D) or IC 23-19-4-1(b)(1)(F) or an
investment adviser under IC 23-19-4-3(b)(1)(C); or
(3) issue an order under IC 23-19-2-4.
(b) An order under subsection (a) is effective on the date of
issuance. Upon issuance of the order, the commissioner shall
promptly serve each person subject to the order with a copy of the
order and a notice that the order has been entered. The order must
include a statement whether the commissioner will seek a civil
penalty or costs of the investigation, a statement of the reasons for
the order, and notice that, within fifteen (15) days after receipt of a
request in a record from the person, the matter will be scheduled for
a hearing. If a person subject to the order does not request a hearing
and none is ordered by the commissioner within forty-five (45) days
after the date of service of the order, the order, which may include a
civil penalty or costs of the investigation if a civil penalty or costs
were sought in the statement accompanying the order, becomes final
as to that person by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend it until final determination.
(c) If a hearing is requested or ordered under subsection (b), the
hearing must be held not later than fifteen (15) business days after
receipt 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 receipt for all other
orders. A final order may not be issued unless the commissioner
makes findings of fact and conclusions of law in a record. The final
order may make final, vacate, or modify the order issued under
subsection (a).
(d) In a final order under subsection (c), the commissioner may
impose a civil penalty up to ten thousand dollars ($10,000) per
violation. Penalties collected under this section shall be deposited in
the securities division enforcement account established under section
1 of this chapter.
(e) In a final order, the commissioner may charge the cost of an
investigation or proceeding for a violation of this article or a rule
adopted or order issued under this article.
(f) If a petition for judicial review of a final order is not filed in
accordance with section 9 of this chapter, the commissioner may file
a certified copy of the final order with the clerk of a court with
jurisdiction. The order so filed has the same effect as a judgment of
the court and may be recorded, enforced, or satisfied in the same
manner as a judgment of the court.
(g) If a person does not comply with an order under this section,
the commissioner may petition a court with jurisdiction to enforce
the order. The court may not require the commissioner to post a bond
in an action or proceeding under this section. If the court finds, after
service and opportunity for hearing, that the person was not in
compliance with the order, the court may adjudge the person in civil
contempt of the order. The court may impose a further civil penalty
against the person for contempt in an amount not greater than twenty
thousand dollars ($20,000) for each violation and may grant any
other relief the court determines is just and proper in the
circumstances.
(h) The commissioner shall send a certified copy of every final
order that suspends or revokes a person's registration under this
article, or that orders a person who is not registered under this article
to cease and desist from violating this article, to the insurance
commissioner appointed under IC 27-1-1-2. The insurance
commissioner shall act in accordance with IC 27-1-15.6-29.5. As added by P.L.27-2007, SEC.23. Amended by P.L.156-2009,
SEC.24.
IC 23-19-6-5 Rules, forms, and orders; financial statements; interpretive
opinions and determinations; good faith conduct; public hearings
Sec. 5. (a) The commissioner may:
(1) issue forms and orders and, after notice and comment, may
adopt and amend rules necessary or appropriate to carry out this
article and may repeal rules, including rules and forms
governing registration statements, applications, notice filings,
reports, and other records;
(2) by rule, define terms, whether or not used in this article, but
those definitions may not be inconsistent with this article; and
(3) by rule, classify securities, persons, and transactions and
adopt different requirements for different classes.
(b) Under this article, a rule or form may not be adopted or
amended, or an order issued or amended, unless the commissioner
finds that the rule, form, order, or amendment is necessary or
appropriate in the public interest or for the protection of investors
and is consistent with the purposes intended by this article.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1938 (15 U.S.C. 78o(h)) and Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), the commissioner may require that
a financial statement filed under this article be prepared in
accordance with generally accepted accounting principles in the
United States and comply with other requirements specified by rule
adopted or order issued under this article. A rule adopted or order
issued under this article may establish:
(1) subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) and Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), the form and content
of financial statements required under this article;
(2) whether unconsolidated financial statements must be filed;
and
(3) whether required financial statements must be audited by an
independent certified public accountant.
(d) The commissioner may provide interpretative opinions or
issue determinations that the commissioner will not institute a
proceeding or an action under this article against a specified person
for engaging in a specified act, practice, or course of business if the
determination is consistent with this article. The commissioner shall
charge a fee of one hundred dollars ($100) for an interpretative
opinion or determination.
(e) A penalty under this article may not be imposed for, and
liability does not arise from, conduct that is engaged in or omitted in
good faith and reasonably believed to be conforming to a rule, form,
or order of the commissioner under this article.
(f) A hearing in an administrative proceeding under this article
must be conducted in public unless the commissioner finds a
statutory basis that would allow the hearing to be closed to the
public. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.19; P.L.3-2008, SEC.172.
IC 23-19-6-6 Public register of filings; charges
Sec. 6. (a) The commissioner shall maintain, or designate a person
to maintain, a register of applications for registration of securities;
registration statements; notice filings; applications for registration of
broker-dealers, agents, investment advisers, and investment adviser
representatives; notice filings by federal covered investment advisers
that are or have been effective under this article or the predecessor
act; notices of claims of exemption from registration or notice filing
requirements contained in a record; orders issued under this article
or the predecessor act; and interpretative opinions or no-action
determinations issued under this article.
(b) The commissioner shall make all rules, forms, interpretative
opinions, and orders available to the public.
(c) The commissioner shall furnish a copy of a record that is a
public record, or a certification that the public record does not exist,
to a person that so requests. A rule adopted under this article may
establish a reasonable charge for furnishing the record or
certification. A copy of the record certified or a certificate by the
commissioner of a record's nonexistence is prima facie evidence of
a record or its nonexistence. As added by P.L.27-2007, SEC.23.
IC 23-19-6-7 Public records; inspection and copying; confidential records
Sec. 7. (a) Except as otherwise provided in subsection (b), records
obtained by the commissioner or filed under this article, including a
record contained in or filed with a registration statement, application,
notice filing, or report, are public records and are available for
inspection and copying.
(b) The following records are confidential and are not available
for public inspection and copying under subsection (a):
(1) A record obtained by the commissioner in connection with
an audit or inspection under IC 23-19-4-11(d) or an
investigation under section 2 of this chapter.
(2) A part of a record filed in connection with a registration
statement under IC 23-19-3-1 and IC 23-19-3-3 through
IC 23-19-3-5 or a record under IC 23-19-4-11(d) that contains
trade secrets or confidential information if the person filing the
registration statement or report has asserted a claim of
confidentiality or privilege that is authorized by law and
approved by the commissioner.
(3) A record that is not required to be provided to the
commissioner or filed under this article and is provided to the
commissioner only on the condition that the record will not be
subject to public examination or disclosure.
(4) Confidential records received from a person specified in
section 8(a) of this chapter.
(5) Any Social Security number, residential address unless used
as a business address, and residential telephone number unless
used as a business telephone number, contained in a record that
is filed.
(6) A record obtained by the commissioner through a designee
of the commissioner that a rule or order under this article
determines has been:
(A) expunged from the commissioner's records by the
designee; or
(B) determined to be confidential by that designee if the
commissioner finds the determination to be based on
statutory authority.
(c) If disclosure is for the purpose of a civil, administrative, or
criminal investigation, action, or proceeding or to a person specified
in section 8(a) of this chapter, the commissioner may disclose a
record obtained in connection with an audit or inspection under
IC 23-19-4-11(d) or a record obtained in connection with an
investigation under section 2 of this chapter. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.20.
IC 23-19-6-8 Uniformity objective; cooperation with agencies; policies
Sec. 8. (a) The commissioner shall, in its discretion, cooperate,
coordinate, consult, and, subject to section 7 of this chapter, share
records and information with the securities regulator of another state,
Canada, a Canadian province or territory, a foreign jurisdiction, the
Securities and Exchange Commission, the United States Department
of Justice, the Commodity Futures Trading Commission, the Federal
Trade Commission, the Securities Investor Protection Corporation,
a self-regulatory organization, a national or international
organization of securities regulators, a federal or state banking and
insurance regulator, or a governmental law enforcement agency to
effectuate greater uniformity in securities matters among the federal
government, self-regulatory organizations, states, and foreign
governments.
(b) In cooperating, coordinating, consulting, and sharing records
and information under this section and in acting by rule, order, or
waiver under this article, the commissioner shall, in its discretion,
take into consideration in carrying out the public interest the
following general policies:
(1) Maximizing effectiveness of regulation for the protection of
investors.
(2) Maximizing uniformity in federal and state regulatory
standards.
(3) Minimizing burdens on the business of capital formation,
without adversely affecting essentials of investor protection.
(c) The cooperation, coordination, consultation, and sharing of
records and information authorized by this section includes:
(1) establishing or employing one (1) or more designees as a
central depository for registration and notice filings under this
article and for records required or allowed to be maintained
under this article;
(2) developing and maintaining uniform forms;
(3) conducting a joint examination or investigation;
(4) holding a joint administrative hearing;
(5) instituting and prosecuting a joint civil or administrative
proceeding;
(6) sharing and exchanging personnel;
(7) coordinating registrations under IC 23-19-3 and
IC 23-19-4-1 through IC 23-19-4-4 and exemptions under
IC 23-19-2-3;
(8) sharing and exchanging records, subject to section 7 of this
chapter;
(9) formulating rules, statements of policy, guidelines, forms,
and interpretative opinions and releases;
(10) formulating common systems and procedures;
(11) notifying the public of proposed rules, forms, statements of
policy, and guidelines;
(12) attending conferences and other meetings among securities
regulators, which may include representatives of governmental
and private sector organizations involved in capital formation,
considered necessary or appropriate to promote or achieve
uniformity; and
(13) developing and maintaining a uniform exemption from
registration for small issuers, and taking other steps to reduce
the burden of raising investment capital by small businesses. As added by P.L.27-2007, SEC.23.
IC 23-19-6-9 Appeals from orders; transcripts; trial de novo
Sec. 9. (a) An appeal may be taken by:
(1) any issuer, investment adviser, or registered broker-dealer
whose application for registration of an issue of securities may
have been granted or denied, from any final order of the
commissioner respecting that application or registration;
(2) any applicant for registration as a broker-dealer, investment
adviser, or agent of any registered broker-dealer, investment
advisor, or agent, from any final order of the commissioner
affecting the application or registration as a broker-dealer,
investment adviser, or agent;
(3) any person against whom a civil penalty has been imposed
under section 3(b) or 4(d) of this chapter, from the final order
of the commissioner imposing the civil penalty; or
(4) any person who is named a respondent, from any final order
issued by the commissioner under section 2, 3, or 4 of this
chapter;
to the circuit or superior court of Marion County or the county
wherein the person taking the appeal resides or maintains a place of
business.
(b) Within twenty (20) days after the entry of the order, the
commissioner shall be served with:
(1) a written notice of the appeal stating the court to which the
appeal will be taken and the grounds upon which a reversal of
the final order is sought;
(2) a demand in writing for a certified transcript of the record
and of all papers on file in the commissioner's office affecting
or relating to the order; and
(3) a bond in the penal sum of five hundred dollars ($500) to the
state of Indiana with sufficient surety to be approved by the
commissioner, conditioned upon the faithful prosecution of the
appeal to final judgment and the payment of all costs that shall
be adjudged against the appellant.
(c) After the commissioner has been served with the items
specified in subsection (b), the commissioner shall within ten (10)
days make, certify, and deliver to the appellant the transcript, and the
appellant shall within five (5) days file the same and a copy of the
notice of appeal with the clerk of the court, which notice of appeal
shall stand as appellant's complaint, and the commissioner may
appear and file any motion or pleading and form the issue. The cause
shall be entered on the trial calendar for trial de novo and given
precedence over all matters pending in the court.
(d) The court shall receive and consider any pertinent evidence,
whether oral or documentary, concerning the order of the
commissioner from which the appeal is taken. If the order of the
commissioner is reversed, the court shall in its mandate specifically
direct the commissioner as to the commissioner's further action in the
matter, including the making and entering of any order or orders in
connection therewith and the conditions, limitations, or restrictions
to be contained. The commissioner is not barred from revoking or
altering the order for any proper cause that may thereafter accrue or
be discovered. If the order is affirmed, the appellant is not barred
after thirty (30) days from filing a new application if the application
is not otherwise barred or limited. The appeal shall not in any way
suspend the operation of the order appealed from during the
pendency of the appeal unless upon proper order of the court. An
appeal may be taken from the judgment of the court on any appeal on
the same terms and conditions as an appeal is taken in civil actions. As added by P.L.27-2007, SEC.23.
IC 23-19-6-10 Jurisdiction
Sec. 10. (a) IC 23-19-3-1, IC 23-19-3-2, IC 23-19-4-1(a),
IC 23-19-4-2(a), IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-5-1,
IC 23-19-5-6, IC 23-19-5-9, and IC 23-19-5-10 do not apply to a
person that sells or offers to sell a security unless the offer to sell or
the sale is made in Indiana or the offer to purchase or the purchase
is made and accepted in Indiana.
(b) IC 23-19-4-1(a), IC 23-19-4-2(a), IC 23-19-4-3(a),
IC 23-19-4-4(a), IC 23-19-5-1, IC 23-19-5-6, IC 23-19-5-9, and
IC 23-19-5-10 do not apply to a person that purchases or offers to
purchase a security unless the offer to purchase or the purchase is
made in Indiana or the offer to sell or the sale is made and accepted
in Indiana.
(c) For the purpose of this section, an offer to sell or to purchase
a security is made in Indiana, whether or not either party is then
present in Indiana, if the offer:
(1) originates from within Indiana;
(2) is directed by the offeror to a place in Indiana and received
at the place to which it is directed; or
(3) is directed by the offeror to a resident of Indiana.
(d) For the purpose of this section, an offer to purchase or to sell
is accepted in Indiana, whether or not either party is then present in
Indiana, if the acceptance:
(1) is communicated to the offeror in Indiana and the offeree
reasonably believes the offeror to be present in Indiana and the
acceptance is received at the place in Indiana to which it is
directed or to another place in Indiana; and
(2) has not previously been communicated to the offeror, orally
or in a record, outside this state.
(e) An offer to sell or to purchase is not made in Indiana when a
publisher circulates, or there is circulated on the publisher's behalf,
in Indiana a bona fide newspaper or other publication of general,
regular, and paid circulation that is not published in Indiana, or that
is published in Indiana but has had more than two-thirds (2/3) of its
circulation outside Indiana during the previous twelve (12) months,
or when a radio or television program or other electronic
communication originating outside Indiana is received in Indiana. A
radio or television program or other electronic communication is
considered as having originated in Indiana if either the broadcast
studio or the originating source of transmission is located in Indiana,
unless:
(1) the program or communication is syndicated and distributed
from outside Indiana for redistribution to the general public in
Indiana;
(2) the program or communication is supplied by a radio,
television, or other electronic network with the electronic signal
originating from outside Indiana for redistribution to the general
public in Indiana;
(3) the program or communication is an electronic
communication that originates outside Indiana and is captured
for redistribution to the general public in Indiana by a
community antenna or cable, radio, cable television, or other
electronic system; or
(4) the program or communication consists of an electronic
communication that originates in Indiana, but which is not
intended for distribution to the general public in Indiana.
(f) IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-4-5(a),
IC 23-19-5-2, IC 23-19-5-5, and IC 23-19-5-6 apply to a person if the
person engages in an act, practice, or course of business instrumental
in effecting prohibited or actionable conduct in this state, whether or
not either party is then present in this state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-11 Consent to service of process; conduct constituting agent for
service of process; procedures; continuances
Sec. 11. (a) An irrevocable consent to service of process required
by this article must be signed and filed in the form required by a rule
or order under this article. A consent appointing the secretary of state
as the person's agent for service of process in an action or proceeding
against the person, or the person's successor or personal
representative under this article or a rule adopted or order issued
under this article after the consent is filed, has the same force and
validity as if the service were made personally on the person filing
the consent. A person that has filed a consent complying with this
subsection in connection with a previous application for registration
or notice filing need not file an additional consent.
(b) If a person, including a nonresident of this state, engages in an
act, practice, or course of business prohibited or made actionable by
this article or a rule adopted or order issued under this article and the
person has not filed a consent to service of process under subsection
(a), the act, practice, or course of business constitutes the
appointment of the secretary of state as the person's agent for service
of process in an action or proceeding against the person or the
person's successor or personal representative.
(c) Service under subsection (a) or (b) may be made by providing
a copy of the process to the office of the secretary of state, but it is
not effective unless:
(1) the plaintiff, which may be the commissioner, promptly
sends notice of the service and a copy of the process, return
receipt requested, to the respondent at the address set forth in
the consent to service of process or, if a consent to service of
process has not been filed, at the last known address of the
respondent, or takes other reasonable steps to give notice; and
(2) the plaintiff files an affidavit of compliance with this
subsection in the action or proceeding on or before the return
day of the process, if any, or within the time that the court, or
the commissioner in a proceeding before the commissioner,
allows.
(d) Service under subsection (c) may be used in a proceeding
before the commissioner or by the commissioner in a civil action in
which the commissioner is the moving party.
(e) If process is served under subsection (c), the court, or the
commissioner in a proceeding before the commissioner, shall order
continuances as are necessary or appropriate to afford the defendant
or respondent reasonable opportunity to defend. As added by P.L.27-2007, SEC.23.
IC 23-19-6-12 Award of percentage of penalty imposed to person providing
information
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. As added by P.L.114-2010, SEC.11.
IC 23-19-6
Chapter 6. Administration and Judicial Review
IC 23-19-6-1 Securities division; securities commissioner; unlawful use of
nonpublic information; investor education initiatives; securities
division enforcement account; securities restitution fund;
assistance from attorney general; police powers
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. Notwithstanding IC 9-23-6-4, IC 23-2-2.5-34,
IC 23-2-2.5-43, IC 23-2-5-7, IC 23-19-4-12, IC 25-11-1-15, and this
chapter, five percent (5%) of funds received after June 30, 2010, for
deposit in the enforcement account shall instead be deposited in the
securities restitution fund established under IC 23-20-1-26. Subject
to IC 4-2-6-15, the funds deposited 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. As added by P.L.27-2007, SEC.23. Amended by P.L.114-2010,
SEC.10.
IC 23-19-6-2 Investigations; subpoenas; depositions; relief; hearings; use
immunity; certificate of compliance or noncompliance; witness fees
Sec. 2. (a) The commissioner may:
(1) conduct public or private investigations within or outside
this state which the commissioner considers necessary or
appropriate to determine whether a person has violated, is
violating, or is about to violate this article or a rule adopted or
order issued under this article, or to aid in the enforcement of
this article or in the adoption of rules and forms under this
article;
(2) require or permit a person to testify, file a statement, or
produce a record, under oath or otherwise as the commissioner
determines, as to all the facts and circumstances concerning a
matter to be investigated or about which an action or proceeding
is to be instituted; and
(3) publish a record concerning an action, proceeding, or an
investigation under, or a violation of, this article or a rule
adopted or order issued under this article if the commissioner
determines it is necessary or appropriate in the public interest
and for the protection of investors.
(b) For the purpose of an investigation under this article, the
commissioner or the commissioner's designated officer may
administer oaths and affirmations, subpoena witnesses, seek
compulsion of attendance, take evidence, require the filing of
statements, and require the production of any records that the
commissioner considers relevant or material to the investigation.
Upon order of the commissioner or a hearing officer appointed by the
commissioner in any hearing, depositions may be taken in the
manner prescribed by law for depositions in civil actions and made
returnable to the commissioner or a hearing officer appointed by the
commissioner.
(c) If a person does not appear or refuses to testify, file a
statement, or produce records, or otherwise does not obey a subpoena
as required by this article, the commissioner or hearing officer
appointed by the commissioner may apply to the circuit or superior
court in the county where the hearing, investigation, or inquiry in
question is being conducted to enforce compliance. The court may:
(1) hold the person in contempt;
(2) order the person to appear before the commissioner or
hearing officer appointed by the commissioner;
(3) order the person to testify about the matter under
investigation or in question;
(4) order the production of records;
(5) grant injunctive relief, including restricting or prohibiting
the offer or sale of securities or the providing of investment
advice;
(6) impose a civil penalty of not more than twenty thousand
dollars ($20,000) for each violation; and
(7) grant any other necessary or appropriate relief.
(d) This section does not preclude a person from applying to the
circuit or superior court in the county where the hearing,
investigation, or inquiry in question is being conducted for relief
from a request to appear, testify, file a statement, produce records, or
obey a subpoena.
(e) If a witness, in any hearing, inquiry, or investigation
conducted under this article, 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
the use of 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.
(f) At the request of the securities regulator of another state or a
foreign jurisdiction, the commissioner may provide assistance if the
requesting regulator states that it is conducting an investigation to
determine whether a person has violated, is violating, or is about to
violate a law or rule of the other state or foreign jurisdiction relating
to securities matters that the requesting regulator administers or
enforces. The commissioner may provide the assistance by using the
authority to investigate and the powers conferred by this section as
the commissioner determines is necessary or appropriate. The
assistance may be provided without regard to whether the conduct
described in the request would also constitute a violation of this
article or other law of this state if occurring in this state. In deciding
whether to provide the assistance, the commissioner may consider
whether the requesting regulator is permitted and has agreed to
provide assistance reciprocally within its state or foreign jurisdiction
to the commissioner on securities matters when requested; whether
compliance with the request would violate or prejudice the public
policy of this state; and the availability of resources and employees
of the commissioner to carry out the request for assistance.
(g) In any prosecution, action, suit, or proceeding based upon or
arising out of or under the provisions of this article, a certificate duly
signed by the commissioner showing compliance or noncompliance
with the provisions of this article, respecting the security in question
or respecting compliance or noncompliance of this article, by any
issuer, broker-dealer, investment advisor, or agent, shall constitute
prima facie evidence of compliance or noncompliance with the
provisions of this article, as the case may be, and shall be admissible
in evidence in any action at law or in equity to enforce this article.
(h) Each witness who shall appear before the commissioner or a
hearing officer appointed by the commissioner by order shall receive
for the witness's attendance the fees and mileage provided for
witnesses in civil cases, which shall be audited and paid by the state
in the same manner as other expenses of the securities division are
audited and paid upon the presentation of proper vouchers sworn to
by the witnesses and approved by the commissioner. However, no
witnesses subpoenaed at the instance of parties other than the
commissioner or a hearing officer appointed by the commissioner
shall be entitled to any fee or compensation from the state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-3 Violations; injunctions; other remedies
Sec. 3. (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 article or a rule adopted or
order issued under this article 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 article or a rule adopted or order issued under this
article, 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 article or a rule adopted
or order issued under this article.
(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 take charge and control of a respondent's
property, including investment accounts and accounts in a
depository institution, rents, and profits; to collect debts; and
to acquire and dispose of property;
(C) imposing a civil penalty 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 article or the predecessor act
or a rule adopted or order issued under this article or the
predecessor act; 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 article.
(d) Penalties collected under this section shall be deposited in the
securities division enforcement account established under section 1
of this chapter. As added by P.L.27-2007, SEC.23.
IC 23-19-6-4 Violations; investigations; cease and desist orders and other
orders; hearings; civil penalties; appeals; civil contempt; certified
copy of order
Sec. 4. (a) If the commissioner determines 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 article or a rule
adopted or order issued under this article or that a person has
materially aided, is materially aiding, or is about to materially aid an
act, practice, or course of business constituting a violation of this
article or a rule adopted or order issued under this article, the
commissioner may:
(1) investigate and may issue, with or without a prior hearing,
orders and notices as the commissioner determines to be in the
public interest, including cease and desist orders, orders to
show cause, and notices. After notice and hearing, the
commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the legal rate of interest,
directed to a person who has violated this article or a rule or
order under this article;
(2) issue an order denying, suspending, revoking, or
conditioning the exemptions for a broker-dealer under
IC 23-19-4-1(b)(1)(D) or IC 23-19-4-1(b)(1)(F) or an
investment adviser under IC 23-19-4-3(b)(1)(C); or
(3) issue an order under IC 23-19-2-4.
(b) An order under subsection (a) is effective on the date of
issuance. Upon issuance of the order, the commissioner shall
promptly serve each person subject to the order with a copy of the
order and a notice that the order has been entered. The order must
include a statement whether the commissioner will seek a civil
penalty or costs of the investigation, a statement of the reasons for
the order, and notice that, within fifteen (15) days after receipt of a
request in a record from the person, the matter will be scheduled for
a hearing. If a person subject to the order does not request a hearing
and none is ordered by the commissioner within forty-five (45) days
after the date of service of the order, the order, which may include a
civil penalty or costs of the investigation if a civil penalty or costs
were sought in the statement accompanying the order, becomes final
as to that person by operation of law. If a hearing is requested or
ordered, the commissioner, after notice of and opportunity for
hearing to each person subject to the order, may modify or vacate the
order or extend it until final determination.
(c) If a hearing is requested or ordered under subsection (b), the
hearing must be held not later than fifteen (15) business days after
receipt 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 receipt for all other
orders. A final order may not be issued unless the commissioner
makes findings of fact and conclusions of law in a record. The final
order may make final, vacate, or modify the order issued under
subsection (a).
(d) In a final order under subsection (c), the commissioner may
impose a civil penalty up to ten thousand dollars ($10,000) per
violation. Penalties collected under this section shall be deposited in
the securities division enforcement account established under section
1 of this chapter.
(e) In a final order, the commissioner may charge the cost of an
investigation or proceeding for a violation of this article or a rule
adopted or order issued under this article.
(f) If a petition for judicial review of a final order is not filed in
accordance with section 9 of this chapter, the commissioner may file
a certified copy of the final order with the clerk of a court with
jurisdiction. The order so filed has the same effect as a judgment of
the court and may be recorded, enforced, or satisfied in the same
manner as a judgment of the court.
(g) If a person does not comply with an order under this section,
the commissioner may petition a court with jurisdiction to enforce
the order. The court may not require the commissioner to post a bond
in an action or proceeding under this section. If the court finds, after
service and opportunity for hearing, that the person was not in
compliance with the order, the court may adjudge the person in civil
contempt of the order. The court may impose a further civil penalty
against the person for contempt in an amount not greater than twenty
thousand dollars ($20,000) for each violation and may grant any
other relief the court determines is just and proper in the
circumstances.
(h) The commissioner shall send a certified copy of every final
order that suspends or revokes a person's registration under this
article, or that orders a person who is not registered under this article
to cease and desist from violating this article, to the insurance
commissioner appointed under IC 27-1-1-2. The insurance
commissioner shall act in accordance with IC 27-1-15.6-29.5. As added by P.L.27-2007, SEC.23. Amended by P.L.156-2009,
SEC.24.
IC 23-19-6-5 Rules, forms, and orders; financial statements; interpretive
opinions and determinations; good faith conduct; public hearings
Sec. 5. (a) The commissioner may:
(1) issue forms and orders and, after notice and comment, may
adopt and amend rules necessary or appropriate to carry out this
article and may repeal rules, including rules and forms
governing registration statements, applications, notice filings,
reports, and other records;
(2) by rule, define terms, whether or not used in this article, but
those definitions may not be inconsistent with this article; and
(3) by rule, classify securities, persons, and transactions and
adopt different requirements for different classes.
(b) Under this article, a rule or form may not be adopted or
amended, or an order issued or amended, unless the commissioner
finds that the rule, form, order, or amendment is necessary or
appropriate in the public interest or for the protection of investors
and is consistent with the purposes intended by this article.
(c) Subject to Section 15(h) of the Securities Exchange Act of
1938 (15 U.S.C. 78o(h)) and Section 222 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-18a), the commissioner may require that
a financial statement filed under this article be prepared in
accordance with generally accepted accounting principles in the
United States and comply with other requirements specified by rule
adopted or order issued under this article. A rule adopted or order
issued under this article may establish:
(1) subject to Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) and Section 222 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-18a), the form and content
of financial statements required under this article;
(2) whether unconsolidated financial statements must be filed;
and
(3) whether required financial statements must be audited by an
independent certified public accountant.
(d) The commissioner may provide interpretative opinions or
issue determinations that the commissioner will not institute a
proceeding or an action under this article against a specified person
for engaging in a specified act, practice, or course of business if the
determination is consistent with this article. The commissioner shall
charge a fee of one hundred dollars ($100) for an interpretative
opinion or determination.
(e) A penalty under this article may not be imposed for, and
liability does not arise from, conduct that is engaged in or omitted in
good faith and reasonably believed to be conforming to a rule, form,
or order of the commissioner under this article.
(f) A hearing in an administrative proceeding under this article
must be conducted in public unless the commissioner finds a
statutory basis that would allow the hearing to be closed to the
public. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.19; P.L.3-2008, SEC.172.
IC 23-19-6-6 Public register of filings; charges
Sec. 6. (a) The commissioner shall maintain, or designate a person
to maintain, a register of applications for registration of securities;
registration statements; notice filings; applications for registration of
broker-dealers, agents, investment advisers, and investment adviser
representatives; notice filings by federal covered investment advisers
that are or have been effective under this article or the predecessor
act; notices of claims of exemption from registration or notice filing
requirements contained in a record; orders issued under this article
or the predecessor act; and interpretative opinions or no-action
determinations issued under this article.
(b) The commissioner shall make all rules, forms, interpretative
opinions, and orders available to the public.
(c) The commissioner shall furnish a copy of a record that is a
public record, or a certification that the public record does not exist,
to a person that so requests. A rule adopted under this article may
establish a reasonable charge for furnishing the record or
certification. A copy of the record certified or a certificate by the
commissioner of a record's nonexistence is prima facie evidence of
a record or its nonexistence. As added by P.L.27-2007, SEC.23.
IC 23-19-6-7 Public records; inspection and copying; confidential records
Sec. 7. (a) Except as otherwise provided in subsection (b), records
obtained by the commissioner or filed under this article, including a
record contained in or filed with a registration statement, application,
notice filing, or report, are public records and are available for
inspection and copying.
(b) The following records are confidential and are not available
for public inspection and copying under subsection (a):
(1) A record obtained by the commissioner in connection with
an audit or inspection under IC 23-19-4-11(d) or an
investigation under section 2 of this chapter.
(2) A part of a record filed in connection with a registration
statement under IC 23-19-3-1 and IC 23-19-3-3 through
IC 23-19-3-5 or a record under IC 23-19-4-11(d) that contains
trade secrets or confidential information if the person filing the
registration statement or report has asserted a claim of
confidentiality or privilege that is authorized by law and
approved by the commissioner.
(3) A record that is not required to be provided to the
commissioner or filed under this article and is provided to the
commissioner only on the condition that the record will not be
subject to public examination or disclosure.
(4) Confidential records received from a person specified in
section 8(a) of this chapter.
(5) Any Social Security number, residential address unless used
as a business address, and residential telephone number unless
used as a business telephone number, contained in a record that
is filed.
(6) A record obtained by the commissioner through a designee
of the commissioner that a rule or order under this article
determines has been:
(A) expunged from the commissioner's records by the
designee; or
(B) determined to be confidential by that designee if the
commissioner finds the determination to be based on
statutory authority.
(c) If disclosure is for the purpose of a civil, administrative, or
criminal investigation, action, or proceeding or to a person specified
in section 8(a) of this chapter, the commissioner may disclose a
record obtained in connection with an audit or inspection under
IC 23-19-4-11(d) or a record obtained in connection with an
investigation under section 2 of this chapter. As added by P.L.27-2007, SEC.23. Amended by P.L.230-2007,
SEC.20.
IC 23-19-6-8 Uniformity objective; cooperation with agencies; policies
Sec. 8. (a) The commissioner shall, in its discretion, cooperate,
coordinate, consult, and, subject to section 7 of this chapter, share
records and information with the securities regulator of another state,
Canada, a Canadian province or territory, a foreign jurisdiction, the
Securities and Exchange Commission, the United States Department
of Justice, the Commodity Futures Trading Commission, the Federal
Trade Commission, the Securities Investor Protection Corporation,
a self-regulatory organization, a national or international
organization of securities regulators, a federal or state banking and
insurance regulator, or a governmental law enforcement agency to
effectuate greater uniformity in securities matters among the federal
government, self-regulatory organizations, states, and foreign
governments.
(b) In cooperating, coordinating, consulting, and sharing records
and information under this section and in acting by rule, order, or
waiver under this article, the commissioner shall, in its discretion,
take into consideration in carrying out the public interest the
following general policies:
(1) Maximizing effectiveness of regulation for the protection of
investors.
(2) Maximizing uniformity in federal and state regulatory
standards.
(3) Minimizing burdens on the business of capital formation,
without adversely affecting essentials of investor protection.
(c) The cooperation, coordination, consultation, and sharing of
records and information authorized by this section includes:
(1) establishing or employing one (1) or more designees as a
central depository for registration and notice filings under this
article and for records required or allowed to be maintained
under this article;
(2) developing and maintaining uniform forms;
(3) conducting a joint examination or investigation;
(4) holding a joint administrative hearing;
(5) instituting and prosecuting a joint civil or administrative
proceeding;
(6) sharing and exchanging personnel;
(7) coordinating registrations under IC 23-19-3 and
IC 23-19-4-1 through IC 23-19-4-4 and exemptions under
IC 23-19-2-3;
(8) sharing and exchanging records, subject to section 7 of this
chapter;
(9) formulating rules, statements of policy, guidelines, forms,
and interpretative opinions and releases;
(10) formulating common systems and procedures;
(11) notifying the public of proposed rules, forms, statements of
policy, and guidelines;
(12) attending conferences and other meetings among securities
regulators, which may include representatives of governmental
and private sector organizations involved in capital formation,
considered necessary or appropriate to promote or achieve
uniformity; and
(13) developing and maintaining a uniform exemption from
registration for small issuers, and taking other steps to reduce
the burden of raising investment capital by small businesses. As added by P.L.27-2007, SEC.23.
IC 23-19-6-9 Appeals from orders; transcripts; trial de novo
Sec. 9. (a) An appeal may be taken by:
(1) any issuer, investment adviser, or registered broker-dealer
whose application for registration of an issue of securities may
have been granted or denied, from any final order of the
commissioner respecting that application or registration;
(2) any applicant for registration as a broker-dealer, investment
adviser, or agent of any registered broker-dealer, investment
advisor, or agent, from any final order of the commissioner
affecting the application or registration as a broker-dealer,
investment adviser, or agent;
(3) any person against whom a civil penalty has been imposed
under section 3(b) or 4(d) of this chapter, from the final order
of the commissioner imposing the civil penalty; or
(4) any person who is named a respondent, from any final order
issued by the commissioner under section 2, 3, or 4 of this
chapter;
to the circuit or superior court of Marion County or the county
wherein the person taking the appeal resides or maintains a place of
business.
(b) Within twenty (20) days after the entry of the order, the
commissioner shall be served with:
(1) a written notice of the appeal stating the court to which the
appeal will be taken and the grounds upon which a reversal of
the final order is sought;
(2) a demand in writing for a certified transcript of the record
and of all papers on file in the commissioner's office affecting
or relating to the order; and
(3) a bond in the penal sum of five hundred dollars ($500) to the
state of Indiana with sufficient surety to be approved by the
commissioner, conditioned upon the faithful prosecution of the
appeal to final judgment and the payment of all costs that shall
be adjudged against the appellant.
(c) After the commissioner has been served with the items
specified in subsection (b), the commissioner shall within ten (10)
days make, certify, and deliver to the appellant the transcript, and the
appellant shall within five (5) days file the same and a copy of the
notice of appeal with the clerk of the court, which notice of appeal
shall stand as appellant's complaint, and the commissioner may
appear and file any motion or pleading and form the issue. The cause
shall be entered on the trial calendar for trial de novo and given
precedence over all matters pending in the court.
(d) The court shall receive and consider any pertinent evidence,
whether oral or documentary, concerning the order of the
commissioner from which the appeal is taken. If the order of the
commissioner is reversed, the court shall in its mandate specifically
direct the commissioner as to the commissioner's further action in the
matter, including the making and entering of any order or orders in
connection therewith and the conditions, limitations, or restrictions
to be contained. The commissioner is not barred from revoking or
altering the order for any proper cause that may thereafter accrue or
be discovered. If the order is affirmed, the appellant is not barred
after thirty (30) days from filing a new application if the application
is not otherwise barred or limited. The appeal shall not in any way
suspend the operation of the order appealed from during the
pendency of the appeal unless upon proper order of the court. An
appeal may be taken from the judgment of the court on any appeal on
the same terms and conditions as an appeal is taken in civil actions. As added by P.L.27-2007, SEC.23.
IC 23-19-6-10 Jurisdiction
Sec. 10. (a) IC 23-19-3-1, IC 23-19-3-2, IC 23-19-4-1(a),
IC 23-19-4-2(a), IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-5-1,
IC 23-19-5-6, IC 23-19-5-9, and IC 23-19-5-10 do not apply to a
person that sells or offers to sell a security unless the offer to sell or
the sale is made in Indiana or the offer to purchase or the purchase
is made and accepted in Indiana.
(b) IC 23-19-4-1(a), IC 23-19-4-2(a), IC 23-19-4-3(a),
IC 23-19-4-4(a), IC 23-19-5-1, IC 23-19-5-6, IC 23-19-5-9, and
IC 23-19-5-10 do not apply to a person that purchases or offers to
purchase a security unless the offer to purchase or the purchase is
made in Indiana or the offer to sell or the sale is made and accepted
in Indiana.
(c) For the purpose of this section, an offer to sell or to purchase
a security is made in Indiana, whether or not either party is then
present in Indiana, if the offer:
(1) originates from within Indiana;
(2) is directed by the offeror to a place in Indiana and received
at the place to which it is directed; or
(3) is directed by the offeror to a resident of Indiana.
(d) For the purpose of this section, an offer to purchase or to sell
is accepted in Indiana, whether or not either party is then present in
Indiana, if the acceptance:
(1) is communicated to the offeror in Indiana and the offeree
reasonably believes the offeror to be present in Indiana and the
acceptance is received at the place in Indiana to which it is
directed or to another place in Indiana; and
(2) has not previously been communicated to the offeror, orally
or in a record, outside this state.
(e) An offer to sell or to purchase is not made in Indiana when a
publisher circulates, or there is circulated on the publisher's behalf,
in Indiana a bona fide newspaper or other publication of general,
regular, and paid circulation that is not published in Indiana, or that
is published in Indiana but has had more than two-thirds (2/3) of its
circulation outside Indiana during the previous twelve (12) months,
or when a radio or television program or other electronic
communication originating outside Indiana is received in Indiana. A
radio or television program or other electronic communication is
considered as having originated in Indiana if either the broadcast
studio or the originating source of transmission is located in Indiana,
unless:
(1) the program or communication is syndicated and distributed
from outside Indiana for redistribution to the general public in
Indiana;
(2) the program or communication is supplied by a radio,
television, or other electronic network with the electronic signal
originating from outside Indiana for redistribution to the general
public in Indiana;
(3) the program or communication is an electronic
communication that originates outside Indiana and is captured
for redistribution to the general public in Indiana by a
community antenna or cable, radio, cable television, or other
electronic system; or
(4) the program or communication consists of an electronic
communication that originates in Indiana, but which is not
intended for distribution to the general public in Indiana.
(f) IC 23-19-4-3(a), IC 23-19-4-4(a), IC 23-19-4-5(a),
IC 23-19-5-2, IC 23-19-5-5, and IC 23-19-5-6 apply to a person if the
person engages in an act, practice, or course of business instrumental
in effecting prohibited or actionable conduct in this state, whether or
not either party is then present in this state. As added by P.L.27-2007, SEC.23.
IC 23-19-6-11 Consent to service of process; conduct constituting agent for
service of process; procedures; continuances
Sec. 11. (a) An irrevocable consent to service of process required
by this article must be signed and filed in the form required by a rule
or order under this article. A consent appointing the secretary of state
as the person's agent for service of process in an action or proceeding
against the person, or the person's successor or personal
representative under this article or a rule adopted or order issued
under this article after the consent is filed, has the same force and
validity as if the service were made personally on the person filing
the consent. A person that has filed a consent complying with this
subsection in connection with a previous application for registration
or notice filing need not file an additional consent.
(b) If a person, including a nonresident of this state, engages in an
act, practice, or course of business prohibited or made actionable by
this article or a rule adopted or order issued under this article and the
person has not filed a consent to service of process under subsection
(a), the act, practice, or course of business constitutes the
appointment of the secretary of state as the person's agent for service
of process in an action or proceeding against the person or the
person's successor or personal representative.
(c) Service under subsection (a) or (b) may be made by providing
a copy of the process to the office of the secretary of state, but it is
not effective unless:
(1) the plaintiff, which may be the commissioner, promptly
sends notice of the service and a copy of the process, return
receipt requested, to the respondent at the address set forth in
the consent to service of process or, if a consent to service of
process has not been filed, at the last known address of the
respondent, or takes other reasonable steps to give notice; and
(2) the plaintiff files an affidavit of compliance with this
subsection in the action or proceeding on or before the return
day of the process, if any, or within the time that the court, or
the commissioner in a proceeding before the commissioner,
allows.
(d) Service under subsection (c) may be used in a proceeding
before the commissioner or by the commissioner in a civil action in
which the commissioner is the moving party.
(e) If process is served under subsection (c), the court, or the
commissioner in a proceeding before the commissioner, shall order
continuances as are necessary or appropriate to afford the defendant
or respondent reasonable opportunity to defend. As added by P.L.27-2007, SEC.23.
IC 23-19-6-12 Award of percentage of penalty imposed to person providing
information
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. As added by P.L.114-2010, SEC.11.
