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Securities division proposes late fees for notice filings; lawmakers raise constitutional question
Summary
The Department of Commerce and Insurance's Securities Division proposed new late fees and other technical changes; members asked whether late fees exceed constitutional limits on fines and sought clarification on due process and filing volumes.
Elizabeth Bowling, assistant commissioner for the Securities Division, explained rule changes to establish late fees for late-filed notice filings, correct statutory references, and adjust the Invest Tennessee exemption limits to encourage capital formation. Bowling said the late-fee structure was calculated based on what a registration fee would have been and that the measure was intended to speed compliance.
Representative Fritz asked whether the proposed late fees — which can reach into the hundreds or thousands — conflict with a Tennessee constitutional provision limiting fines above $50 without jury assessment. Department legal counsel Jacob Strait responded that the new charges are styled as 'late fees' authorized by Public Chapter 112 and follow statutory filing deadlines and administrative procedures; they are not criminal fines and are processed through administrative systems.
Members asked how many late filers exist and Bowling said the division does not have an exact count but runs reports and catches noncompliance when items are brought to attention. The committee moved a positive recommendation and the rule advanced.
