BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2759


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          Date of Hearing:  May 4, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2759 (Levine) - As Introduced February 19, 2016


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          |Policy       |Judiciary                      |Vote:|10 - 0       |
          |Committee:   |                               |     |             |
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          |             |Banking and Finance            |     |11 - 0       |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill allows an individual who is a victim of corporate  
          fraud and who wins a judgment against a corporate officer, but  
          is unable to collect the judgment from the officer, to collect  
          damages from the Corporate Fraud Compensation Fund (Fund) as a  
          similarly situated victim of corporate fraud with a judgment  
          against a corporation is currently able to do.










                                                                    AB 2759


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          FISCAL EFFECT:


          Expanding the type of claims eligible against the Fund will  
          result in unknown additional expenditures. Estimated fund  
          expenditures in 2016-17 are $1.5 million. Additional valid  
          claims would likely increase expenditures by several hundred  
          thousand dollars annually. According to the SOS, the Fund had a  
          balance of $11.9 million as of January 2016.


          COMMENTS:


          1)Background. The Victims of Corporate Fraud Compensation Fund  
            (Fund), which is administered by the Secretary of State (SOS),  
            provides a measure of relief to persons who have been victims  
            of corporate fraud and won a judgment against a corporation,  
            but who are unable to collect the judgment from the  
            corporation after diligent efforts to do so.  The Fund, which  
            was established through legislation in 2002, is funded by fees  
            on corporate filings. In SB 1058 (Lieu), Chapter 564, Statutes  
            of 2012, codified, with some modifications, the rules  
            governing the process of filing claims, recovering  
            restitution, and challenging denials as promulgated by the  
            SOS. SB 1058 also increased the maximum amount that one  
            claimant may recover for any single judgment from $20,000 to  
            $50,000. 


          2)Purpose. This bill allows a victim of corporate fraud and who  
            wins a judgment against a corporate officer, but is unable to  
            collect the judgment, to collect damages from the Fund, just  
            as is currently provided to a similarly situated victim of  
            corporate fraud. This proposal is based on the reality that  
            few victims of corporate fraud are able to obtain judgments  
            against corporations, and that there are few claims made  
            against the Fund. As a result, the Fund is not adequately  
            serving its intended purpose.  This bill would allow more  








                                                                    AB 2759


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            victims of corporate fraud to access the funds for which they  
            are intended.  


          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081