in-20251029-IR-710250231SNA: FINES AND CIVIL PENALTIES

TITLE 710 SECURITIES DIVISION Notice of Second Public Comment Period LSA Document #25-231 FINES AND CIVIL PENALTIES PURPOSE OF NOTICE The Securities Division (division) is soliciting public comment on adding rules at 710 IAC 5 concerning fines and civil penalties as required by House Enrolled Act (HEA) 1623-2023.  The division seeks comment on the affected citations listed and any other provisions of Title 710 that may be affected by this rulemaking. HISTORY Notice of First Public Comment Period: 20250514-IR-710250231FNA Regulatory Analysis submitted with Notice of First Public Comment Period: 20250514-IR-710250231RAA Date of First Hearing: June 17, 2025 Notice of Recall: 20250820-IR-710250231RCA ADDITIONAL DOCUMENTS Regulatory Analysis: No changes were made to the Regulatory Analysis published with the Notice of First Public Comment Period. Notice of Public Hearing: 20251029-IR-710250231PHA CITATIONS AFFECTED:  710 IAC 5 STATUTORY AUTHORITY: IC 23-2-2.5-42; IC 23-2-2.5-47; IC 23-2-6-22; IC 23-2-6-34; IC 23-2.5-11-6; IC 23-19-6-1; IC 23-19-6-5; IC 25-11-1-8; IC 25-11-1-14 OVERVIEW Basic Purpose and Background The division regulates multiple industries doing business in Indiana, including securities, loan brokers, franchises, collection agencies, and commodities.  The division regulates those entities through enforcing rules promulgated under Title 710, as well as Indiana laws codified in the Indiana Code relating to securities (IC 23-19), loan brokers (IC 23-2.5), franchises (IC 23-2-2.5), collection agencies (IC 25-11), and commodities (IC 23-2-6). When a violation of any statutory provisions or promulgated rules under Title 710 is discovered, the division is allowed to take a variety of actions based on the circumstances of the violation.  Specifically, the division is authorized to issue a civil penalty not to exceed ten thousand dollars ($10,000) for each violation. While what constitutes a violation is clearly defined through rule or statute, the exact amount of civil penalty issued for any violation has historically been set by policy. With the passage of HEA 1623-2023, that policy may not be promulgated in rule.  The proposed rule establishes the considerations taken in determining the amount of penalty assessed in a matter. Specifically, the proposed rule adds: (1) 710 IAC 5-1 for violation of the Indiana Uniform Securities Act under IC 23-19; (2) 710 IAC 5-2 for violation of the Indiana Loan Brokers Act under IC 23-2.5; (3) 710 IAC 5-3 for violation of the Indiana Franchises Act under IC 23-2-2.5; (4) 710 IAC 5-4 for violation of the Indiana Collection Agencies Act under IC 5-11; and (5) 710 IAC 5-5 for violation of the Indiana Commodities Act under IC 23-2-6; to establish mitigating and aggravating factors considered when determining the amount to impose as a fine or civil penalty. For purposes of IC 4-22-2-28.1, small businesses affected by this rulemaking may contact the Small Business Regulatory Coordinator: For purposes of IC 4-22-2-28.1, the Small Business Ombudsman designated by IC 5-28-17-6 is: Resources available to regulated entities through the small business ombudsman include the ombudsman's duties stated in IC 5-28-17-6, specifically IC 5-28-17-6(9), investigating and attempting to resolve any matter regarding compliance by a small business with a law, rule, or policy administered by a state agency, either as a party to a proceeding or as a mediator. SUMMARY/RESPONSE TO COMMENTS The division requested public comment from May 14, 2025, through June 13, 2025, and during the public hearing on June 17, 2025.  The division received no comments in response to the Notice of First Public Comment Period. REQUEST FOR PUBLIC COMMENT The division is soliciting public comment on the proposed rule. Comments may be submitted in one of the following ways: COMMENT PERIOD DEADLINE All comments must be postmarked or time stamped not later than November 28, 2025. The rule, Regulatory Analysis, appendices referenced in the Regulatory Analysis, and materials incorporated by reference (if applicable) are on file at the Securities Division, 302 West Washington Street, Room E-111, Indianapolis, Indiana and are available for public inspection. Copies of the rule, Regulatory Analysis, and appendices referenced in the Regulatory Analysis are available at the Securities Division office. This notice is for the second of two (2) thirty (30) day periods in which the public may comment on the proposed rule. Following this second public comment period, the division may adopt a version of the proposed rule that is the same as or does not substantially differ from the text of the proposed rule published in this notice. EXPLANATION OF DIFFERENCES IN PROPOSED RULE There are no differences between the proposed rule in this notie and the proposed rule published in the Notice of First Public Comment Period.  The second comment period is necessary after the original rule was recalled to allow the small business ombudsman to review the proposed rule. PROPOSED RULE Sec. 1. (a) Except as provided in subsection (b), the definitions in this article apply throughout this title. (b) If a definition in this article conflicts with a definition of specific applicability in another part of this title, or in a statute that controls another part of this title, the definition of specific applicability controls. Sec. 2. "Commissioner" means the securities commissioner appointed under IC 23-19-6-1(a). Sec. 3. (a) Except as provided in subsection (b), "fraud", "fraudulent", "deceit", and "defraud" have the meaning set forth in IC 23-19-1-2(9). (b) Fraud and deceit related to franchises includes: Sec. 4. "Harmed person" means the person harmed, defrauded, misled, or deceived by the violation. Sec. 5. (a) Except as provided in subsection (b), "person" has the meaning set forth in IC 23-19-1-2(20). (b) "Person", as it relates to commodities under IC 23-2-6, has the meaning set forth in IC 23-2-6-14. Sec. 6. "Respondent" means the responding party in legal proceedings that a fine or civil penalty has been imposed against. Sec. 1. (a) The commissioner may impose a civil penalty in an amount not to exceed ten thousand dollars ($10,000) on a respondent for each violation under IC 23-19. Mitigating and aggravating factors can affect the amount of civil penalty imposed. (b) Nothing in this rule requires the commissioner to impose a civil penalty for a violation. Sec. 2. Mitigating factors are the extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: Sec. 3. Aggravating factors are the circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: Sec. 4. In certain situations, several violations may have been committed. Separate violations may be grouped for the purpose of applying this policy. The total fine or civil penalty assessed in an enforcement case may include penalties for several violations or groups of violations, each calculated under this policy. Sec. 1. (a) The commissioner may impose a civil penalty in an amount not to exceed ten thousand dollars ($10,000) on a respondent for each violation under IC 23-2-2.5. Mitigating and aggravating factors can affect the amount of civil penalty imposed. (b) Nothing in this rule requires the commissioner to impose a civil penalty for a violation. Sec. 2. Mitigating factors are the extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: Sec. 3. Aggravating factors are the circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: Sec. 4. In certain situations, several violations may have been committed. Separate violations may be grouped for the purpose of imposing a civil penalty. The total fine or civil penalty assessed in an enforcement case may include penalties for several violations or groups of violations, each calculated under this policy. Sec. 1. (a) The commissioner may impose a civil penalty in an amount not to exceed ten thousand dollars ($10,000) on a respondent for each violation under IC 23-2.5. Mitigating and aggravating factors can affect the amount of civil penalty imposed. (b) Nothing in this rule requires the commissioner to impose a civil penalty for a violation. Sec. 2. Mitigating factors are the extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: Sec. 3. Aggravating factors are the circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: Sec. 4. In certain situations, several violations may have been committed. Separate violations may be grouped for the purpose of imposing a civil penalty. The total fine or civil penalty assessed in an enforcement case may include penalties for several violations or groups of violations, each calculated under this policy. Sec. 1. (a) The commissioner may impose a civil penalty of not more than ten thousand dollars ($10,000) on a respondent for any single violation under IC 23-2-6. Mitigating and aggravating factors can affect the amount of civil penalty imposed. (b) Nothing in this rule requires the commissioner to impose a civil penalty for a violation. Sec. 2. Mitigating factors are the extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: Sec. 3. Aggravating factors are the circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: Sec. 4. In certain situations, several violations may have been committed. Separate violations may be grouped for the purpose of applying this policy. The total fine or civil penalty assessed in an enforcement case may include penalties for several violations or groups of violations, each calculated under this policy. Sec. 1. (a) The commissioner may impose a civil penalty in an amount not to exceed ten thousand dollars ($10,000) on a respondent for each violation under IC 25-11. Mitigating and aggravating factors can affect the amount of civil penalty imposed. (b) Nothing in this rule requires the commissioner to impose a civil penalty for a violation. Sec. 2. Mitigating factors are the extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: Sec. 3. Aggravating factors are the circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: Sec. 4. In certain situations, several violations may have been committed. Separate violations may be grouped for the purpose of applying this policy. The total fine or civil penalty assessed in an enforcement case may include penalties for several violations or groups of violations, each calculated under this policy. SECTION 2.  LSA DOCUMENT #25-276, POSTED AT 20250709-IR-710250276IFA, IS REPEALED.