BILL ANALYSIS Ó
AB 2759
Page 1
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
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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