SCS SB 427, HCA 1 -- SECURITIES REGULATION

SPONSOR:  Bartle (Luetkemeyer)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 15 to 0.

This substitute substantially revises and modernizes the
securities regulation laws, incorporating many provisions of the
Uniform Securities Act.  In its main provisions, the substitute:

(1)  Authorizes the Secretary of State to seek court orders
requiring violators to disgorge illicit profits, pay restitution,
and pay into the Investor Education and Protection Fund, which
the substitute establishes;

(2)  Increases criminal fines to $1 million;

(3)  Requires banks with on-premise brokerage firms to comply
with federal rules;

(4)  Modernizes, simplifies, and broadens exemptions from
securities registration with the state;

(5)  Promotes consistency with other states and the Securities
and Exchange Commission in the definition of "security";

(6)  Authorizes civil prosecution of individuals who materially
aid in violations; and

(7)  Adds civil penalties of $10,000 for one violation and up to
$1 million for more than one violation.

HCA 1 -- Clarifies the definition of "security."

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the bill as it passed the Senate
modernizes current law regulating securities to make it uniform
and consistent with federal law.  The bill allows the state to
enforce regulations designed to prevent fraud through
administrative actions and state courts, allows victims of
securities fraud to get restitution from the criminals, increases
fines (so that the fines are not just a "cost of doing illegal
business"), codifies many industry standards, and makes it easier
for the Attorney General to enforce the law and seize ill-gotten
gains of those committing fraud.

Testifying for the bill were Senator Bartle; Representative
Luetkemeyer; Office of the Secretary of State; and Office of the
Attorney General.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:13 am