The head of the state Division of Securities is resigning, following allegations of mismanagement and misuse of authority and a continuing state audit.

Division director Wayne Klein said Monday that he has submitted his resignation to his state Commerce Department chief Francine Giani. He plans to step down at the end of this month.

Klein's decision come amid controversy surrounding a case his agency investigated involving four employees with First Western Advisors Inc., a stock brokerage and investment firm.

Rep. Jim Bird, R-West Jordan, was concerned about the handling of the First Western case and requested the audit late last year. The Legislative Auditor General's Office began the audit in early November and plans to complete its work by the end of the legislative session.

"The division does important work," Giani said Tuesday. "Unfortunately, sometimes they do investigate people that are known by people that can call for audits."

Klein said Tuesday that his resignation would take pressure off the division so that its important work can go forward without him being a lightning rod for criticism.

The controversy traces back to last March, when the Utah Division of Securities alleged that First Western Advisors, along with two current and two former brokers, were part of securities fraud involving nine Utahns who invested more than $20.6 million.

The division had filed a petition to revoke and bar licenses and impose fines against First Western and brokers Gary W. Teran, Carl A. Page, David A. Russon and Brian G. Kasteler. Teran is the company's president, and Russon and Kasteler are former First Western brokers.

Specifically, the division said the agents invested in Class B shares, which have higher costs and higher commissions for the agents than Class A shares of the same fund. However, some clients thought they owned Class A shares based upon Morningstar "Snapshot" reports that the agents sent, reflecting mutual fund performance for Class A shares, the division said.

The division also said that the nine investors testified to the U.S. Securities and Exchange Commission, but the agents tried to contradict their statements by having them sign "mutual-fund disclosure statements" and "declarations" suggesting the investors were always aware of the brokers' actions.