House Bill 559 Alabama 2026 Session

Summary

Primary Sponsor

Kerry UnderwoodRepresentative

Republican

Session

2026 Regular Session

Title

Fraud victims compensation; Market Accountability Compensation Fund, established to provide restitution assistance to victims of investment fraud

Summary

HB559 would create the Market Accountability Compensation Fund in the Alabama State Treasury to provide restitution assistance to investment-fraud victims who cannot recover money from the perpetrator.

What This Bill Does

The bill establishes the Market Accountability Compensation Fund to pay monetary relief to victims of investment fraud who cannot recover from the wrongdoer. It funds the program with an initial transfer of $2.5 million from the Alabama Securities Commission Fund and may add up to $2.25 million, but the fund cannot exceed $2.5 million total. It allows the Alabama Securities Commission to issue restitution assistance awards with specific caps, requires claims to be filed within one year of the final restitution order, and provides for subrogation, enforcement, and penalties for fraudulent claims.

Who It Affects

• Victims of investment fraud who cannot recover restitution from the perpetrator, who may receive funds as restitution assistance
• Vulnerable adults who may have higher award limits
• Named victims or their authorized representatives who file claims
• The Alabama Securities Commission, which administers the fund, awards payments, enforces the act, and pursues subrogation
• Defendants ordered to pay restitution (payments may be redirected to the Commission after the claimant is fully paid)
• District attorneys and law enforcement, which may be involved in investigations and prosecutions under the act

Key Provisions

• Creates the Market Accountability Compensation Fund in the State Treasury to provide monetary relief to eligible investment-fraud victims.
• Transfers an initial $2,500,000 from the ASC Fund to the new fund, with possible additional transfers up to $2,250,000, not to exceed a $2,500,000 total balance.
• Allows the Commission to award restitution assistance to victims who cannot recover from the perpetrator; imposes eligibility and disqualification rules (e.g., dishonest claims, prior full restitution, or involvement in securities violations).
• Awards are capped at the lesser of $25,000 or 25% of unpaid restitution, or for vulnerable individuals, $50,000 or 50% of unpaid restitution; aggregate payments per final order are limited to $250,000; multiple claimants may receive prorated awards.
• The Commission may suspend or prorate payments to keep the fund balance at or above $250,000; payments not guaranteed and may be denied.
• Subrogation allows the Commission to recover paid amounts from the violator; the Commission may file motions with the court; the violator must direct restitution payments to the Commission after the claimant is paid.
• Fraudulent claims or misleading information can lead to Class C felony charges; the Commission has enforcement and investigative powers and can collaborate with district attorneys.
• Claimants must refund any overpayment of restitution when combined with the award exceeds the restitution ordered; five-year statute of limitations to enforce refunds.
• Awards may be overturned and funds may be recovered from claimants if necessary; the act provides procedures for enforcement and refunds of overpayments.
• Effective date is October 1, 2026; the act establishes the Alabama Market Accountability Compensation Fund Act.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Mar 3, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Consumer Protection