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Minutes for SB204 - Committee on Financial Institutions and Insurance
Short Title
Replacing the definition of "charitable beneficiaries" with "qualified charities" in the technology-enabled fiduciary financial institutions act.
Minutes Content for Tue, Apr 4, 2023
Chairperson Longbine convened this meeting of the Financial Institutions and Insurance Committee (FI & I). He told members that Senate President Masterson had withdrawn SB204 from the Senate Calendar and re-referred it to FI & I for further action after it was blessed by the Senate Ways and Means Committee. He noted that there had been much correspondence during the past two weeks between the Office of the State Bank Commissioner (OSBC) and Beneficient (Ben), regarding "trust company" definitions. Chairperson Longbine told members that the Committee would delve back into SB204 with the charge to amend the definition of "trust company" so that the OSBC and Ben can operate without any ambiguity going forward.
David Wiese, Assistant Revisor, Kansas Revisor of Statutes Office (ROS), distributed a balloon amendment, then described the details of the amendment. (Attachment 1) Mr. Wiese deferred to the Proponent, Derek Fletcher, Ben, to answer a question from Senator Pittman regarding the use of "trust company" language in advertising. Mr. Fletcher told Senator Pittman that the difference is the distinction between using the name "trust company" or terms "trust" "company" in advertising, or to solicit business, as opposed to using it only in legal documents and disclosures made to customers and regulatory bodies as a part of their business engagement. Mr. Fletcher also answered a follow-up question from Senator Gossage pertaining to the same subject.
Oral Proponent:
Derek Fletcher, President and Chief Fiduciary Officer, The Beneficient Company Group, LP (Ben), provided testimony on behalf of Beneficient Fiduciary Financial, L. L. C. ("BFF"), Kansas, supporting the amendment previously explained by David Wiese, ROS. Mr. Fletcher noted for the record that there is a typo in the second paragraph of his written testimony. The year reflected should be "2021," not "2001," representing the year when the Kansas legislative body overwhelmingly passed the Technology Enabled Fiduciary Financial Institution (TEFFI) act. He further explained that he is seeking additional clarity to a fundamental issue impacting BFF's operations and the TEFFI industry as a whole: TEFFI's status as a Kansas trust company. (Attachment 2)
Mr. Fletcher reminded members about his response to questions in his prior testimony before the House and Senate committees regarding "What is a TEFFI?" and "What does a TEFFI do?" Further, he quoted numerous statutory provisions under the TEFFI act which make it clear that a TEFFI is a trust company and can engage in trust business under the TEFFI act (Attachment 2, page 2). Mr. Fletcher stressed three reasons for the urgent nature of a resolution to this issue: 1) the position of the regulatory body jeopardizes BFF's business; 2) Ben's public listing; and, 3) the long-term success of the TEFFI industry. Mr. Fletcher answered a follow-up question from Senator Gossage.
There was discussion about how to proceed, followed by motions from the members:
Senator Fagg moved, seconded by Senator Gossage that the amendment to SB204 be adopted. The motion carried.
Senator Dietrich moved, seconded by Senator Fagg, that the contents of HB2133 be stripped from the bill, and the contents of SB204, as amended, be inserted. The motion carried.
Senator Gossage moved, seconded by Senator Warren, that HB2133, as amended, be passed with favorable recommendation to the full Senate. The motion carried.
The meeting adjourned at 4:19 pm. There are no other meetings scheduled for F I & I during this session.
