House Finance Committee introduces draft bill to continue Colorado Securities Act after DORA review

The House Finance Committee on Monday voted to introduce a draft bill to continue the Colorado Securities Act after a Title 24 sunset review presented by DORA and the Office of Legislative Legal Services.

DORA’s director of the Office of Policy Research and Regulatory Reform, Brian Tobias, told the committee the review supports continuing the Act and the Securities Board for 11 years, through 2037, because the office judged the statute necessary to protect investors, maintain market integrity and provide technical enforcement capacity that complements federal regulators.

The recommendation package included seven items: (1–2) continuation of the Act and board for 11 years; (3) clarifying that Division deficiency letters are non‑public; (4) streamlining the show‑cause/cease‑and‑desist and summary‑suspension process by issuing preliminary orders with a 30‑day window to request a hearing; (5) clarifying that investment advisors ‘‘transacting business’’ in Colorado must be licensed unless exempt (aligning state language with the Uniform Securities Act); (6) specifying that the DORA executive director consult the Securities Board when appointing the securities commissioner; and (7) a technical gender‑neutral language update.

Tobias gave fiscal and operational context: in FY24 the Division of Securities employed about 28 FTE and had roughly $5.7 million in expenditures; during the review period the Division processed about 135 registered securities offerings, roughly 6,051 exemption filings (including three crowdfunding exemptions), conducted about 110 examinations, and reported roughly 355 unique complaints. He said three local government investment pools held about $20.7 billion in assets under management during FY24. Tobias cautioned that counts such as the 254,000 broker‑dealer sales representative registrations reflect nationwide licensing mechanics and do not mean all listed individuals are Colorado residents.

Colorado Securities Commissioner Chan Tung testified in favor of continuation, saying the Division provides investigative and prosecutorial support for fraud cases, assists local prosecutors and criminal authorities, and reported FY24 judgments and awards ‘‘of over $110,000,000.’’ Commissioner Chan described outreach and education work and said the Division focuses on retail Colorado investors.

Representative Marshall asked about a decline in restitution orders (from roughly $30 million in FY19–20 to $2 million in FY23–24) despite rising complaint counts. Commissioner Chan and Tobias said the 2017 Senior Act requires mandatory reporting of suspected senior exploitation, which introduced large numbers of ‘‘clearinghouse’’ reports that do not all become Division cases; they also cited jurisdictional limits (many crypto‑related romance scams are not securities or are out‑of‑state) and case‑size variability as explanations for the different trajectories in complaints versus restitution.

After witness testimony the committee voted, without recorded objection, to introduce the draft sunset bill. The committee named Representatives Titone and Camacho as bill sponsors and recorded Representative Stewart as a co‑sponsor. If the committee proceeds to introduce the proposed bill formally, amendments may be offered after introduction under the usual bill process described by the Office of Legislative Legal Services.

What happens next: introducing the draft bill places a formal measure into the legislative process; if the committee votes to introduce it later as drafted or amended it will proceed to the committee of reference for further consideration. The sunset review materials and draft language are based on the October report prepared under Title 24 and the OLLS draft that the committee voted to advance.