Kansas is the birthplace of state securities law
09/08/2011 12:00 AM
08/08/2014 10:05 AM
Wichita will become the investor protection capital of North America next week.
Securities regulators from each state, along with the provinces and territories of Canada, are coming to Wichita to participate in the annual conference of the North American Securities Administrators Association, the oldest international organization devoted to investor protection.
It makes sense that we are coming home to Kansas, the birthplace of state securities law.
More so than any other kind of regulator, state securities regulators focus on protecting "Mom and Pop" investors. Our primary goal has been and remains to protect investors, especially those who lack the expertise, experience and resources to protect their own interests.
History shows that the best tips and information tend to flow from the ground up. So as the regulators closest to investors, state securities regulators serve a vital role as the best resource for investors to turn to for help when they have concerns about what appears to be an investment "opportunity."
Our job is to make sure investors get a fair deal based on full and accurate information. This has been true since the passage of the nation's first blue sky law in 1911 in Kansas.
A century ago, Kansas Banking Commissioner Joseph Dolley took a stand against stock speculators running rampant in Kansas and urged state legislators to act.
The Legislature responded, and on March 10, 1911, the Kansas Blue Sky law was enacted. The new law was aimed at what a Kansas judge later called "speculative schemes which have no more basis than so many feet of blue sky."
And with that, state securities regulation, or "blue sky" law, was born.
Much has changed in the last century. For example, we're not just in Kansas anymore.
Today, each state has a government agency similar to the Office of the Kansas Securities Commissioner responsible for investor protection. Together, these agencies act as a national network made of local crime fighters working to protect investors.
In the past year alone, state securities regulators have opened more than 7,100 investigations, which resulted in more than 3,400 enforcement actions. These actions led to $14.1 billion ordered returned to defrauded investors, $155 million in fines and penalties, and more than 1,100 years of jail time for securities lawbreakers.
In addition to enforcing state securities laws, state securities regulators provide investor education to teach investors how to avoid investment fraud. As part of this effort, state securities regulators recently issued an alert on the top traps and threats facing investors today, much in the way Commissioner Dolley did 100 years ago when he created the Investment Information Bureau to warn Kansans of investment scams.
This year's traps include schemes related to the uncertainty that has plagued our economy. They include: distressed real estate schemes, energy investments, gold and precious metal investments, promissory notes and securitized life settlement contracts.
Many of the products and practices in this year's list of top investor traps use the promise of guaranteed returns to lure investors. Everyone wants solid returns with little or no risk. But that's not how the real world works.
Legitimate financial professionals know this and explain the risk/reward ratio to their clients.
But fly-by-night con artists don't play by the same rules. Instead, they use promises of high return with little or no risk as tools with which to fleece their victims.
And that's why we continue to share Commissioner Dolley's commitment to protect investors "from fakers with worthless stock to sell."
State securities regulators have a 100-year record of protecting investors, and we look forward to continuing this service into our next century of investor protection.
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