BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2759 (Levine) - Corporations:  agents:  victims of corporate  
          fraud compensation fund
          
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          |Version: August 2, 2016         |Policy Vote: B. & F.I. 7 - 0,   |
          |                                |          JUD. 7 - 0            |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: August 11, 2016   |Consultant: Jolie Onodera       |
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          *********** ANALYSIS ADDENDUM - SUSPENSE FILE ***********
             The following information is revised to reflect amendments 
                     adopted by the committee on August 11, 2016






          Bill  
          Summary:  AB 2759 would extend the authority of victims of  
          corporate fraud to pursue compensation from the Victims of  
          Corporate Fraud Compensation Fund (VCFCF), administered by the  
          Secretary of State (SOS), beyond claims against a corporation to  
          include fraudulent acts committed by an agent of a corporation,  
          as well as attorney's fees if ordered by a court in the final  
          judgment, as specified.


          Fiscal  
          Impact:  







          AB 2759 (Levine)                                       Page 1 of  
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            Secretary of State  :  Potential increase in administrative  
            costs, likely minor and absorbable (General Fund) to (1)  
            revise and distribute forms and notices, (2) process a greater  
            number of claims for reimbursement against agents of  
            corporations, and, (3) enforce and collect repayments to the  
            VCFCF for claims paid on individual restitution orders. 
            VCFCF payments  :  Potentially significant to major increase in  
            future payments made from the VCFCF due to extending  
            compensation eligibility to include claims against agents of  
            corporations. For every 10 to 20 claims paid at the $50,000  
            cap per claim, costs would be $0.5 million to $1 million  
            (Special Fund*). The VCFCF is projected to receive revenues of  
            $1.7 million in FY 2016-17, with an ending reserve balance of  
            $12.4 million. Annual payments out of the VCFCF have been in  
            the range of $1.5 million to $1.8 million. Staff notes the  
            current level of fee revenues, in the absence of regular  
            repayments to the VCFCF, will be insufficient to sustain  
            future increases in payments from the VCFCF. Repayments to the  
            SOS on claims paid from the VCFCF are rare, with no repayments  
            provided over the last three years. 
            Repeal of interest  :  Minor future reductions to VCFCF claim  
            payment amounts that will no longer have interest applied to  
            the outstanding award payment during the period that the VCFCF  
            balance is insufficient to fully satisfy the award. To date,  
            no interest has been assessed or paid on VCFCF payments.
           
           *Victims of Corporate Fraud Compensation Fund




          Committee  
          Amendments:  With regard to the payment of attorney's fees,  
          deletes the following statement on page 4 in lines 27-29:  
          "Additionally provides that the Legislature finds and declares  
          that this paragraph does not constitute a change in, but is  
          declaratory of, existing law."  


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          AB 2759 (Levine)                                       Page 2 of  
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