BILL ANALYSIS Ó
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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