Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the TEFI Oversight topic
No spam. Unsubscribe anytime.
Researchers urge regulatory changes after TEFI parent troubles; committee to consider SB 300 and SB 301
Summary
KLRD researchers summarized oversight concerns about a technology-enabled fiduciary financial institution (TEFI) whose parent company's CEO resigned and was later federally indicted; the committee recommended that the Office of the State Bank Commissioner draft rules, meet monthly with chartered TEFIs, and pursue legislation (SB 300, SB 301) for charter revocation and a receivership policy.
KLRD researcher Mike Ditch told the committee that recent media reports and testimony showed governance, oversight and solvency problems at a technology-enabled fiduciary financial institution (TEFI) and its parent company, prompting recommendations for strengthened regulatory authority.
Ditch noted media reports that the parent-company CEO and board chair had resigned and later that the former CEO and chair was federally indicted for alleged securities and wire fraud. He said Office of the State Bank Commissioner (OSBC) examinations cited significant and repeated violations of Kansas statutes, rules and regulations and that OSBC had proposed corrective action. "Corrective action signals that OSBC believes the [TEFI] needs significant improvement to thrive," Ditch said.
The report recommended that OSBC engage the TEFI and obtain private or professional assistance to draft rules and regulations for the industry, institute monthly meetings between OSBC and all chartered TEFIs, and pursue drafting and prefiling legislation in both chambers to amend the TEFI chartering statute to authorize charter revocation with an appeal process (referenced as SB 300). The report also recommended drafting legislation (SB 301) stating the State of Kansas will not accept receivership of an insolvent or bankrupt TFI.
Ditch summarized TEFI testimony that the institution continued to make distributions to a local foundation and to the Department of Commerce, but that a related grocery-store project lacked sufficient funding to begin construction. Company representatives acknowledged insolvency risks and ongoing legal challenges and described mediation and efforts to resolve issues.
The chair noted Senate Bill 301 will have a hearing Monday, Jan. 26; Senate Bill 300 remains in committee and has not been scheduled for a hearing, the chair said.
The committee did not take a formal vote on statutory changes during the session; researchers said legislative drafting (SB 300 and SB 301) is being considered for pre-filing and further committee hearings.
