Friday, July 29, 2011

Indiana Uniform Securities Act: How The Asset Freeze Remedy Affects Both The Defendant And Alleged Victims

In mid 2008 the Indiana Uniform Securities Act was amended, and several significant changes were made to it. One of the amendments dealt with remedies that the Indiana Securities Division, through the Securities Commissioner, could seek in court against alleged violators of the law. The new amendment provided, in IC § 23-19-6-3(b)(2)(A), that upon a proper showing that a court could  “order other appropriate or ancillary relief, which may include: (A) an asset freeze.”

This issue of an asset freeze remedy recently became relevant when the Indiana Securities Division filed a complaint against Indiana money manager, Keenan Hauke, in Hamilton County, alleging in its complaint that Hauke “misled investors by failing to inform them that the fund they were investing would be converted to his personal use.” In addition to these allegations, the Securities Commissioner moved the court for a temporary freeze of Hauke’s assets, alleging that “good and reasonable cause exists to believe [Hauke and his businesses] violated the Indiana Uniform Securities Act.” On April 15, 2011, a Hamilton County judge issued a temporary asset freeze against Hauke, even though the case is still very much in the preliminary stages.

This real life case where this new remedy of an asset freeze has been used successfully by the State is an interesting new twist in securities law in Indiana. It does, however, make us ponder some issues regarding this remedy, especially as it relates to such an order prior to the conclusion of the entire case.

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