Committee considers 2 securities division bills

Two similar bills reforming the Utah Division of Securities came before a legislative committee on Wednesday, but committee members let it be known they want to tackle only one.

The two bills would replace the division's advisory board with an identically constituted securities commission to provide oversight of the division, with the commission conducting administrative hearings. That role currently is handled by the division director.

But one bill provides clean-up language that does not relate to an audit critical of the division and recommending the commission.

"I just think the way the audit came back and the recommendations from the audit are so important that we really need to address that and take care of those problems," Rep. Jim Bird, R-West Jordan, told the Business and Labor Interim Committee. Bird had requested the audit and is sponsoring the bill without the update language.

The legislative audit, released in early July, described the division as rife with personnel conflicts, with unclear roles in handling duties and inconsistent and sometimes inappropriate management of cases. The audit primarily attributed the problems to the division not following established policies and procedures.

Division officials have said the audit recommendations have been implemented, except for those needing legislative action.

The committee on Wednesday approved a motion saying it preferred one bill rather than two, and Bird and Keith Woodwell, director of the securities division, said they would work on a consensus bill. Woodwell earlier had said the division could support either bill. Bird also had suggested having one bill with the securities commission provisions and another with the update language.

Woodwell said creation of the commission would eliminate a current conflict of interest.

"As the law is currently written, there is an Inherent conflict of interest with the securities director's role, where the director is both in

charge of the investigations and audits the division conducts, but also is ultimate fact-finder on an administrative hearing in the event there is a case that results from the investigations and audits," he said. "And that requires the director to kind of play both roles — overseeing the investigation but also trying to maintain some sense of neutrality where you can be a neutral decision-maker at the end of the administrative hearing process."