Securities commissioner defends small enforcement staff as House-amended bill raises fees about 20%

Tim Karski, North Dakota securities commissioner, told the Senate Appropriations Government Operations Division that the state’s Securities Department is a small, revenue-generating regulator focused on investor protection and legitimate capital formation.

“The primary regulatory objective of the securities department are investor protection and the support of legitimate capital formation,” Commissioner Tim Karski said as he opened his testimony on House Bill 1011. He said the department has 10 full‑time employees and requested no new FTEs for the 2025–27 biennium.

Karski outlined the department’s 2025–27 budget request as $3,388,330, broken into $2,686,987 for salaries and wages and $643,171 for operating. He said current‑biennium revenues are on track to meet or exceed about $24 million and that the agency has historically returned large net deposits to the general fund. He described the department as a special‑fund agency that keeps its appropriation level and annually transfers excess collections to the general fund under North Dakota law.

The hearing focused in part on a House amendment to the bill that raises several annual registration fees. Karski said those fee adjustments average about 20 percent and would generate “almost $3,900,000” in additional revenue for the department in the coming biennium. He noted the department did not request the fee increases; the changes were added on the House side.

Karski described the department’s core work — registration and oversight of securities offerings, broker‑dealers and investment advisers; examinations; investigations; enforcement; and investor education — and gave several metrics: the department handled automated annual renewals for roughly 24,255 industry renewals (about $7.8 million in recent renewal payments) through the central registration depository (CRD). He said a three‑year look back showed about 125 North Dakota companies filed to raise roughly $1.5 billion in capital.

Karski also described enforcement caseloads that he said consume most resources. He said the agency recently helped stop a nationwide Ponzi scheme that stole about $130 million nationally, with North Dakota investors estimated to have lost about $45 million. He also described other ongoing multi‑million‑dollar investigations and the department’s practice of making criminal referrals to federal authorities.

Committee members pressed on staffing. Karski said two positions remained vacant when he spoke: an investigator and an attorney. He said the investor education coordinator and an administrative assistant had been recently filled and that the attorney position was actively advertised. When asked, he gave an advertised salary range for the attorney slot of about $95,000–$105,000.

Senator Susan Burkhart (Senator Burkhart) asked about crowdfunding portals; Karski deferred to Candace Johnson of the Securities Department, who explained that crowdfunding portals are online platforms that allow companies to raise capital entirely online.

Karski asked the committee for one bill amendment: to add $50,000 to the department’s operating line in the Senate appropriation (an approximately 1.4 percent increase over the House version) to cover unanticipated legal and investigative expenses related to ongoing cases. He said if the funds were not needed they would revert to the general fund at year end.

The hearing ended with committee members noting the fee increase carried in the House bill and signaling further conversation as the committee works the budget.

Ending: The committee did not take a final vote during the hearing. Karski said the department would continue recruiting to fill vacancies and would work with the Appropriations staff on any requested amendments.