COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.: 3670-01

Bill No.: Perfected HB 1423

Subject: Business and Commerce: Secretary of State; Securities

Type: Original

Date: April 26, 2006

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 4 pages.

ASSUMPTION

Officials from the Office of State Treasurer, Department of Insurance, and the Department of Economic Development - Division of Finance and Division of Credit Unions state this proposed legislation will have no fiscal impact on their respective agencies.

Officials from the Office of the Secretary of State -Administrative Rules Division (SOS) assume many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is provided with core funding to handle a certain amount of normal activity resulting from each year's legislative session. The fiscal impact for this proposal for Administrative Rules is less than $1,500. The SOS recognizes this is a small amount and does not expect additional funding would be required to meet these costs. However, SOS also recognizes that many such bills may be passed in a given year and that collectively the costs may be in excess of what the SOS can sustain with their core budget. Any additional required funding would be handled through the budget process.

Officials from the Office of Secretary of State - Securities Division (SOS), state the variable annuity exception from Missouri's securities law would authorize the Commissioner of Securities to enforce the national standards of professional conduct that the commissioner currently enforces in other securities transactions. This enforcement would be accomplished without any ASSUMPTION (continued)

additional resources.

The additional revenue ($24,500) is the product of the $50 Missouri registration fee times the 490 agents who reside in Missouri but are not registered with the Securities Division.

No additional registration cost to the industry is anticipated because state securities registration occurs by cooperation of state securities officials through the Central Registration Depository operated by the broker-dealers' self-regulatory organization, the National Association of Securities Dealers. For 328 agents who have not passed the Uniform Securities Agent State Law exam at $70 per examination it is estimated that a one-time aggregate cost to those insurance agents selling variable annuities now without a state securities registration may total $22,960.

This proposal would increase total state revenue.

FISCAL IMPACT - Small Business

This proposal could have a negative fiscal impact on certain small businesses, but the impact will not be substantial. It is estimated that 490 agents selling variable annuities and currently registered through the Central Registration Depository would need to pay the $50 Missouri registration fee. However, of these 490 agents, most are associated with large investment companies.

DESCRIPTION

This proposed legislation changes the definition of "security" as it is used in the laws regulating securities so that the sale of variable annuities will be regulated by the Secretary of State.

Currently, sales are regulated by the Department of Insurance.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Office of Secretary of State

Division of Securities

Administrative Rules Division

Office of State Treasurer

Department of Economic Development

Division of Finance

Division of Credit Unions

Department of Insurance

Mickey Wilson, CPA

Director

April 26, 2006