Bill would create Nevada restitution fund for victims of securities fraud, capping awards and drawing on penalties

The Nevada Senate Judiciary Committee heard SB76, introduced by Secretary of State Cisco Aguilar, which would create a fund to provide compensation to Nevada residents who are victims of securities fraud and who have been awarded restitution in criminal or qualifying civil adjudications. The bill directs penalties collected under the Uniform Securities Act (NRS 90 and related chapters) into a separate restitution fund and authorizes awards to victims up to $25,000 per claimant, subject to fund availability and administrative rules.

Deputy (for) securities Aaron Houston summarized the securities division’s investigative structure and the rationale for the fund. He described the securities division’s three teams — registration and licensing, civil examinations, and criminal investigations — and noted that the division’s criminal investigators include sworn officers who pursue felony securities-fraud cases under NRS provisions that prohibit fraud in the sale of securities. Houston said the division receives large loss reports but that restitution to victims is often minimal because fraudsters lack recoverable assets.

Committee testimony cited division statistics to illustrate the gap between reported investor losses and collected restitution. The office reported that the division received complaints totaling millions of dollars in claimed investor losses in recent fiscal years (figures cited included about $16,000,000 for one fiscal year and roughly $10,000,000 for another); the division also reported that restitution ordered in some years was a fraction of those losses — examples given included $205,000 collected in one year and about $760,000 ordered in another year, of which a smaller portion was actually collected. Deputy Houston said the proposal is based on a model recommended by the North American Securities Administrators Association and already enacted in several other states.

Under SB76, only victims who have been awarded restitution under NRS 96.430 (criminal restitution) or by a qualifying civil judgment would be eligible to apply to the restitution fund; the maximum per-claim award would be $25,000. The bill as presented also includes a conceptual cap of $500,000 on the amount diverted from penalties to seed the fund; the sponsor framed that cap as an incremental start and said the office would accept third-party contributions.

Supporters emphasized the bill’s focus on vulnerable victims, including older adults on fixed incomes. Yessica Padron of AARP Nevada told the committee, “we are here eagerly … to testify in strong support of the establishment of the securities restitution fund for victims of fraud,” and said the fund would offer a financial lifeline to many retirees who have lost savings. John McGlamery, a retired senior deputy attorney general, and other former prosecutors also supported the bill and urged lawmakers to ensure sufficient funding and enforcement to provide meaningful relief for victims.

Testimony from the sponsor and securities division clarified key procedural points: a claimant must have an award of restitution before applying to the fund, so the fund does not replace investigative or prosecutorial activity; criminal investigations and referrals to prosecutors must continue. Deputy Houston said cross-border investigations can be difficult if fraudsters are overseas, but civil restitution awards can qualify a victim to apply for fund relief if the victim obtains a judgment and restitution order.

No committee votes were recorded at the hearing. Committee members and witnesses discussed cap levels, seed funding, and outreach to encourage victims to report scams and seek restitution. The sponsor proposed a modest $500,000 cap on initial funding as a compromise to balance state fiscal priorities and victim needs; supporters asked the Legislature to consider larger or ongoing funding mechanisms if the fund demonstrates need.