House panel approves Securities Department budget and 20% hike for several license fees

The Government Operations section of the House Appropriations Committee on Thursday approved an amended budget for the North Dakota Securities Department and voted to raise several licensing fees, including increasing the individual broker/agent registration fee from $60 to $75.

In the committee room, Commissioner Tim Karski of the Securities Department told lawmakers the department has not raised many of these fees in more than 20 years and that the agency’s operations are largely automated. “I will personally tell you that I am gonna look at that,” Karski said of a fee review; he corrected the record earlier in the hearing that an Edward Jones settlement payment the agency had received was $320,000, not $320,000,000.

Committee members said they wanted modest increases to bring North Dakota closer to peer states while avoiding sticker shock for national firms that register in many jurisdictions. “It just feels like those fees should be looked at,” Representative Bauer Bosch said. Several members noted comparisons raised during the hearing: Minnesota’s agent fee was noted around $65, Montana’s agent fee at $100 and South Dakota’s at $125 in the committee’s briefing materials.

Staff presented a scenario estimating that a roughly 20% increase for several registration categories (broker dealers, broker-dealer agents, investment advisers and investment adviser representatives) could generate an additional $3,888,000 over the upcoming biennium under the assumptions the department provided. The committee also reviewed counts of registrants the department provided: about 1,165 broker-dealer firms and roughly 124,000 registered agents and representatives in the department’s list. Committee members pointed out that the majority of those licensees are domiciled out of state.

Committee staff and the department identified where fees are set in law and rules. Candace Johnson, department staff, told the committee that most of the registration fees the committee discussed are codified in the administrative code section the staff cited (section 10-4.10, subsection 8, in the department’s fee schedule). Committee staff said mortgage-originator fees are managed under a different code pathway; the committee confirmed statutory amendments would be the vehicle for changing fees that are set in statute.

Representative Bosch moved to approve the budget as recommended by the governor’s office with the fee changes presented by staff; Representative Meyer seconded. The roll-call on the motion recorded unanimous committee support: Chairman Munson — yes; Vice Chairman Brandenburg — yes; Representatives Bosch, Fisher, Kempenick, Meyer and Pyle — yes. The committee later took a second formal vote to recommend House Bill 1011 as amended; that motion also carried on a unanimous roll call.

The additional fee revenue identified by staff would be collected by the department and, under current law, any excess above the department’s needs would be deposited to the state general fund at the close of the biennium, staff said. The committee directed staff to add the fee schedule changes to the long sheet and to carry the amended budget out to full committee.

What’s next: HB1011, as amended, will move to the full Appropriations Committee. If the House approves the bill, statutory changes to fee amounts would be required where the fees are set in statute; committee staff said the long sheet and amendment language will capture those statutory edits.