Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
292.322
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
292.322(6) requires the
commissioner to promulgate administrative regulations, in consultation with the
Attorney General and local prosecutors, for the use of money in the Securities
Fraud Prosecution and Prevention Fund. This administrative regulation
establishes the procedures for distributing and using the money from the
Securities Fraud Prosecution and Prevention Fund.
Section 1. Definitions.
(1) "Commissioner" is defined by
KRS
292.310(4).
(2) "Department" is defined by
KRS
292.310(7).
(3) "Outside agency" means:
(a) The office of the Kentucky Attorney
General;
(b) The office of the
United States Attorney;
(c) The
office of any county or Commonwealth attorney in Kentucky; or
(d) Any other state or federal regulatory or
criminal enforcement agency.
(4) "Securities Fraud Prosecution and
Prevention Fund" means the account established under
KRS
292.322(1).
Section 2. Authorization for Use
of Funds.
(1) The commissioner may disburse
funds held in the Securities Fraud Prosecution and Prevention Fund to cover the
expenses of the department or an outside agency for the purposes of prosecuting
or aiding the prosecution of fraudulent securities-related activities, whether
arising from an investigation initiated or conducted by the department or from
the independent investigation of an outside agency. In addition, the funds may
be used to cover the expenses for training related to the prevention,
detection, or investigation of securities-related fraud, and for consumer
education aimed at preventing victimization by securities-related
fraud.
(2) Authorized expenses may
relate to the following:
(a) Training and
equipment;
(b)
Investigation;
(c) Trial
preparation and trial, including discovery;
(d) Witness expenses;
(e) Travel expenses;
(f) Sentencing;
(g) Appeal; or
(h) Consumer education initiatives.
Section 3. Application
and Approval for Disbursement of Funds.
(1)
The department may utilize any of the following for application, approval, and
disbursement of funds to an outside agency:
(a) A written agreement or memorandum of
understanding with an outside agency covering actual expenses for a set period
of time or the actual expenses for a particular prosecution, investigation,
training, or initiative. Each agreement or memorandum of understanding shall be
signed by the commissioner and an authorized representative of the outside
agency and shall identify:
1. The effective
period;
2. The expenses to be
covered;
3. The dollar limit, if
any; and
4. The manner and form of
billing expenses and the process for disbursement of funds.
(b) A written application
submitted to the department for payment of prosecution-related or other
authorized expenses shall include the following information:
1. The agency applicant name, address, and
contact information;
2. A detailed
description and estimated amount of the expenses sought to be covered, or if
expenses have already been incurred, proof of incurrence of these
expenses;
3. A detailed description
of the cases, persons, and crimes being considered for prosecution, if
applicable; and
4. A detailed
description of the expenses, training, or initiative being proposed or sought
for reimbursement.
(c)
For funds sought to be utilized for the purposes set forth in Section 2 of this
administrative regulation, the commissioner shall maintain an accounting and
memorandum of all these expenditures which shall include the information
required under paragraph (b) of this subsection.
(2) The commissioner shall approve or deny
the application for funds in writing. The approval shall contain the terms of
disbursement including the maximum amount to be reimbursed, the billing process
to be implemented, and reporting requirements for the disbursement of
funds.
(3) A completed invoice or
voucher in a form acceptable to the commissioner shall be submitted for all
expenses for which payment or reimbursement from the account is
sought.
Section 4.
Funding Criteria. Allocation of funds by the commissioner to other agencies
shall be based on funds available in the account established under the
provisions of
KRS
292.322 and the following criteria:
(1) The likelihood that any investigation or
inquiry will lead to criminal prosecution;
(2) Whether criminal prosecution is imminent;
or
(3) A demonstration of need for
funds to accomplish the purposes set forth in Section 2 of this administrative
regulation.
Section 5.
Disbursement Limitation. The commissioner shall not be required to disburse any
funds unless the Securities Fraud Prosecution and Prevention Fund contains
sufficient funds to cover the agreed disbursements. The commissioner and the
department shall not be required to make disbursements from the department's
own operating funds.
Section 6.
Confidentiality of Information Provided in Funding Applications. The
commissioner shall keep confidential and withhold from public inspection all
information provided by outside agencies that:
(1) Is furnished to the department on the
express condition that the information remain confidential; or
(2) The commissioner determines is necessary
to withhold to protect the public welfare by avoiding the premature or
unwarranted disclosure of information concerning any criminal investigation,
prosecution, or litigation.
STATUTORY AUTHORITY:
KRS
292.322(6)