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At the WV Legislature: Senate Judiciary advances Securities Restitution Assistance Fund – SB 576

By Autumn Shelton, WV Press Association

CHARLESTON, W.Va. – A bill designed to provide some financial relief for state residents who have become victims of investment scams is progressing through the legislative process. 

On Wednesday, SB 576 (Securities Restitution Assistance Fund), was advanced by the Senate Judiciary Committee.

Championed by those with AARP-WV, the purpose of the bill, sponsored by Sen. Ryan Weld, R-Brooke, is to create the Securities Restitution Operating Fund. This fund would provide reimbursements to vulnerable victims, identified as those over the age of 65 or those with mental incapacitation, up to $50,000 or 50% of their financial loss following investment scams. All other victims of such crimes would receive $25,000 or 25% of their financial loss. 

A similar House Bill (HB 3250) has been introduced by Del. Steve Westfall, R-Jackson. 

According to Lisa Hopkins, general counsel and deputy commissioner of securities for the State Auditor’s Office, money for the fund would come from already existing charges that are collected each year by the auditor’s office. 

“In West Virginia, every broker dealer, every investment advisor, every representative and agent of those entities . . . must be registered with us,” Hopkins said. “For example, this past year, we had almost 205,000 registrations.”

She said that a portion of certain financial transactions completed through these entities is ultimately placed into the state’s general revenue fund. 

“Last year we collected $27 million in fees,” Hopkins stated. 

As the committee substitute of the bill was presented, at least 3% of those collected fees would be placed in the new Securities Restitution Operating Fund. However, an amendment proposed by Senate Minority Leader Michael Woelfel, D-Cabell, which was approved by the committee, upped the amount to at least 5%, meaning that the fund would contain about $1.35 million to compensate victims instead of the original $800,000 committee substitute estimate. 

In addition to providing some financial relief for West Virginia residents who become victims of securities scams, the act may also provide an incentive for victims to come forward and report that a crime, including those involving fraudulent crypto and gold and silver exchanges, has been committed, Hopkins explained. 

“What we see in terms of fraud with the elderly is the tip of the iceberg,” Hopkins said. “We really don’t know the extent of losses that are out there because a lot of factors influence why . . . these folks don’t come forward.” 

Hopkins stated that victims often feel “shame or embarrassment” and won’t come forward out of fear that others will view them as “incompetent.” 

“I always say scam artists follow what’s topical – follow the money,” Hopkins continued. “We have seen a perfect storm over the course of our lifetimes where we transitioned from pension plans to 401[k]s. So, we have this whole generation of adults – and, you know, let’s face it, West Virginia is aging – who are coming into this money that they have worked hard for their entire lives, and they don’t really necessarily have the training or the knowledge or the expertise as to what to do with it.” 

AARP-WV State Director Gaylene Miller added in her testimony before the committee that scammers are becoming more sophisticated, and will often promise their victims “a once in a lifetime guaranteed return on your investment.” 

“The bad guys are good at what they do,” Miller continued. “They know how to push the right buttons and, unfortunately, folks fall for those lines.” 

In response to a question from Committee Chairman Charles Trump, R-Morgan, about what scams this act will provide restitution for, Miller responded that certain scams like “romance scams” are becoming very common, “but this particular piece of legislation targets securities fraud directly.” 

“Some of those other kinds of scams and frauds, I don’t think, would fall into the purview of this legislation, but there’s certainly other things that this legislature has done in terms of definitions, in terms of penalties, as it relates to financial exploitation – particularly of vulnerable adults – to help address this situation,” Miller said. 

Following Miller’s testimony, Sen. Mike Stuart, R-Kanawha, added, “I think it’s a great bill.” 

“These crimes go so under-reported,” he continued. “We have no idea the scope and scale of these because, in many cases, folks are embarrassed that, ‘I’m a lawyer or I’m a doctor or I’m a judge’s wife or whatever,’ they don’t report them because they’re so embarrassed by it. Perhaps West Virginia could now be a leader in terms of being able to quantify, at a national scale, just the extent of the damage from this type of thing.” 

“I’d say we need to find the bad guys and drain them of their resources to pay back what they stole,” Stuart concluded. 

The committee substitute version of SB 576 is now headed to the Senate Finance Committee for further consideration. 

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