in-20250514-IR-710250276INA: FINES AND CIVIL PENALTIES

TITLE 710 SECURITIES DIVISION Notice of Public Comment Period For Interim Rule LSA Document #25-276 FINES AND CIVIL PENALTIES PURPOSE OF NOTICE The Securities Division (division) is soliciting public comment on an interim rule to be temporarily added before the adoption of a rule concerning fines and civil penalties 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. ADDITIONAL DOCUMENTS Governor's Approval: 20250514-IR-710250276GAA Regulatory Analysis: 20250514-IR-710250276RAA 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 industries 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. The division has initiated the permanent rulemaking process for the interim rule through making this a temporary rule until the permanent rule is approved. Statement Justifying Requirement or Cost The interim rule does not add or increase fines or civil penalties allowed by statute, but rather identifies mitigating and aggravating factors that may be considered in assessing fines or civil penalties that were not previously in the Indiana Code or Indiana Administrative Code. Additionally, the proposed permanent rule places the fines and civil penalties set and currently charged by the division into a single article, 710 IAC 5. REQUEST FOR PUBLIC COMMENT The division is soliciting public comment on the interim 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 June 13, 2025. The rule, Regulatory Analysis, appendices referenced in the Regulatory Analysis and Statement Justifying Requirement or Cost, 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 and Statement Justifying Requirement or Cost are available at the Securities Division office. PROPOSED INTERIM RULE 710 IAC 5-1-1 Applicability (Interim Rule) Sec. 1. (a) Except as provided in subsection (b), the definitions contained 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. (Securities Division; 710 IAC 5-1-1) 710 IAC 5-1-2 "Commissioner" defined (Interim Rule) Sec. 2. "Commissioner" means the securities commissioner appointed under IC 23-19-6-1(a). (Securities Division; 710 IAC 5-1-2) 710 IAC 5-1-3 "Fraud" defined (Interim Rule) 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: (Securities Division; 710 IAC 5-1-3) 710 IAC 5-1-4 "Harmed person" defined (Interim Rule) Sec. 4. "Harmed person" means the person harmed, defrauded, misled, or deceived by the violation. (Securities Division; 710 IAC 5-1-4) 710 IAC 5-1-5 "Person" defined (Interim Rule) 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. (Securities Division; 710 IAC 5-1-5) 710 IAC 5-1-6 "Respondent" defined (Interim Rule) Sec. 6. "Respondent" means the responding party in legal proceedings that a fine or civil penalty has been imposed against. (Securities Division; 710 IAC 5-1-6) 710 IAC 5-2-1 Applicability (Interim Rule) 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. (Securities Division; 710 IAC 5-2-1) 710 IAC 5-2-2 Mitigating factors (Interim Rule) Sec. 2. Mitigating factors are extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-2-2) 710 IAC 5-2-3 Aggravating factors (Interim Rule) Sec. 3. Aggravating factors are circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-2-3) 710 IAC 5-2-4 Multiple violations (Interim Rule) 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. (Securities Division; 710 IAC 5-2-4) 710 IAC 5-3-1 Applicability (Interim Rule) 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. (Securities Division; 710 IAC 5-3-1) 710 IAC 5-3-2 Mitigating factors (Interim Rule) Sec. 2. Mitigating factors are extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-3-2) 710 IAC 5-3-3 Aggravating factors (Interim Rule) Sec. 3. Aggravating factors are circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-3-3) 710 IAC 5-3-4 Multiple violations (Interim Rule) 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. (Securities Division; 710 IAC 5-3-4) 710 IAC 5-4-1 Applicability (Interim Rule) Sec. 1. (a) The commissioner may impose a civil penalty in an amount not to exceed a maximum of 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. (Securities Division; 710 IAC 5-4-1) 710 IAC 5-4-2 Mitigating factors (Interim Rule) Sec. 2. Mitigating factors are extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-4-2) 710 IAC 5-4-3 Aggravating factors (Interim Rule) Sec. 3. Aggravating factors are circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-4-3) 710 IAC 5-4-4 Multiple violations (Interim Rule) 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. (Securities Division; 710 IAC 5-4-4) 710 IAC 5-5-1 Applicability (Interim Rule) 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. (Securities Division; 710 IAC 5-5-1) 710 IAC 5-5-2 Mitigating factors (Interim Rule) Sec. 2. Mitigating factors are extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-5-2) 710 IAC 5-5-3 Aggravating factors (Interim Rule) Sec. 3. Aggravating factors are circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-5-3) 710 IAC 5-5-4 Multiple violations (Interim Rule) 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. (Securities Division; 710 IAC 5-5-4) 710 IAC 5-6-1 Applicability (Interim Rule) 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. (Securities Division; 710 IAC 5-6-1) 710 IAC 5-6-2 Mitigating factors (Interim Rule) Sec. 2. Mitigating factors are extenuating circumstances that may lead to a reduced civil penalty. The mitigating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-6-2) 710 IAC 5-6-3 Aggravating factors (Interim Rule) Sec. 3. Aggravating factors are circumstances that may increase an imposed civil penalty. The aggravating circumstances that may be considered include the following: (Securities Division; 710 IAC 5-6-3) 710 IAC 5-6-4 Multiple violations (Interim Rule) 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. (Securities Division; 710 IAC 5-6-4)