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Minutes for SB23 - Committee on Financial Institutions and Insurance
Short Title
Consolidating criminal prosecutions for fraud and abuse under the jurisdiction of the attorney general and establishing the office of the securities commissioner as a division under the jurisdiction of the commissioner of insurance.
Minutes Content for Wed, Jan 25, 2017
Chairperson Longbine opened the hearing on SB23. Eileen Ma gave an overview of the bill and responded to questions from Senators Hensley and Pyle.
Commissioner Ken Selzer (KID) presented testimony supporting passage of SB23. He explained that there is an overlap between the KSC and KID. Like many other states, these offices have taken steps to better serve their citizens and to also gain efficiencies. Under this bill, the AG would handle prosecutorial duties for both the KID and the new Securities unit within the combined Insurance and Securities Department. (Attachment 1)
AG Derek Schmidt also testified in support of SB23. He concluded that adopting SB23 would be a major step forward in the state's ability to prosecute financial crimes such as insurance crimes, securities crimes, and financial abuse of elder persons and disabled adults, while achieving a more effective use of existing resources. (Attachment 2)
Commissioner Josh Ney (KSC) spoke in support of SB23. He posed that this bill is a significant improvement to the public policy of the state because it: 1) creates savings to SGF; 2) invests in a new AG Financial Fraud Unit; 3) reduces duplication of regulatory efforts; and 4) preserves independent administration of the Kansas Uniform Securities Act. (Attachment 3)
Zac Anshutz (AE), also supported passage of SB23. He reasoned that more than ever today, consumers are planning their retirements and would be able to facilitate their goals using both insurance and securities products. The merger of KID and KSC would accomplish streamlined administrative functions and the opportunity to interact with one regulatory body instead of two. Also, this merger would lead to comprehensive oversight of financial services and greater consumer protection. (Attachment 4)
The Chairperson pointed the committee's attention to the supportive written-only testimony of Jennifer Cook, Deputy Commissioner Consumer and Mortgage Division, Office of the State Bank Commissioner (OSBC) (Attachment 5) and Bradley Burke, Deputy Secretary and Chief Attorney, Kansas Department of Labor (KDOL) (Attachment 6).
Chairperson Longbine called for questions for any of the proponents. Commissioners Selzer and Ney, and General Schmidt responded to questions from Senators Hensley, Suellentrop, and Rogers.
David Brant (CNB) presented testimony opposing SB23. As a former Kansas Securities Commissioner, he expressed strong opposition to the bill, making several points: 1) consolidation will result in only modest savings; 2) strong functional regulators are best to protect consumers; 3) securities and insurance regulators should coordinate and work together as needed; 4) insurance industry influence could weaken securities consumer protections; and 4) Kansans don't want their securities regulator to become a puppet of the insurance industry. (Attachment 7)
Roger Walter also spoke in opposition to SB23. He related that based upon his knowledge and 30 years of experience in the field of securities regulations, securities law, and regulated persons and entities, he could not see how consolidation would result in any significant budgetary savings. He also failed to see how a particular individual or persons could function effectively in both agencies. (Attachment 8)
The Chairperson pointed the committee's attention to the opponent written-only testimony of Diane A. Nygaard. (Attachment 9) He then asked if there were any questions for the opponents. Mr. Brant and Mr. Walter responded to a question from Senator Hensley.
Chairperson Longbine closed the hearing on SB23. He reminded the committee that they would be working bills tomorrow. The meeting adjourned at 10:33 am.
The next scheduled meeting is Wednesday, January 26, 2017 at 9:30 am.
