The Bureau and its activities.
The mission of the Iowa Securities & Regulated Industries Bureau is investor protection through the administration and enforcement of the Iowa Uniform Securities Act, an act prohibiting fraud in securities transactions and requiring the registration of broker-dealers, investment advisers, agents, investment adviser representatives and the registration of securities.
The bureau also administers:
The primary responsibility of the Securities Bureau is to administer Chapter 502, the Iowa Uniform Securities Act. The Bureau also has responsibility for administering the Model State Commodity Code, Chapter 502A. The Regulated Industries Unit (RIU) administers all areas within the Bureau not involving securities or insurance. These include the Prearranged Funeral Contracts Act, Chapter 523A, Residential Service Contracts Act Chapter 523C, Chapter 321I, Motor Vehicle Service Contracts Act, Iowa Retirement Facilities Act, Chapter 523D, Cemeteries Act, Chapter 523I, and Cemetery Merchandise Act, Chapter 523E.
The Iowa Supreme Court has stated that the purpose of the state securities law is " the suppression of fraudulent practices and the protection of the public from their own gullibility." In addition to this investor protection purpose, the second purpose of securities regulation is preserving the integrity of the capital formation system, thereby maintaining investor confidence in the markets and allowing legitimate businesses to raise capital. The Bureau attempts to accomplish these purposes by the following means: 1) enforcement of the anti-fraud, securities registration and broker-dealer/agent licensing laws; 2) securities registration review to ensure compliance with the full disclosure and substantive investor protection sections of the Code; 3) licensing of broker-dealers and agents with emphasis on review of disciplinary history to determine whether to deny or revoke the license; (4) broker-dealer and investment adviser examinations; and 5) investor education and public information distribution.
The Bureau has significant enforcement powers, including subpoena power, ability to take statements under oath, take evidence and compel production of books and records. The primary focus of the Bureau are cases involving securities fraud and sale of illegitimate products. The Bureau also investigates investor complaints concerning brokerage and investment advisor firms or agent misconduct. The Bureau utilizes its cease and desist power to halt unethical and illegal activity. The Bureau also investigates and develops more serious cases which are filed as civil injunctive actions by an assistant attorney general or are referred for criminal prosecution. In civil injunctive actions, the Bureau has the authority to seek restitution on behalf of investors, and disgorgement of illegal profits.
The Bureau reviews registration statements for compliance with the full disclosure and substantive investor protection provisions of the Code (cheap stock escrow, excessive underwriters compensation, excessive options and warrants, and "tend to work a fraud"). An examiner will review the documents and if questions arise, provide comments to counsel for the applicant. Counsel will provide information, answer questions or add disclosures to the prospectus. The process is quasi-negotiation, quasi-adversarial. The Bureau has a simplified, fast track registration system for issuers planning to raise up to $1 million in a public offering. The staff provides substantial assistance to entrepreneurs to walk them through this process.
All brokerage firms, investment advisers, individual agents and investment adviser representatives who do business with Iowa residents must be licensed. Agents and investment adviser representatives are required to have passed certain exams. All applicants provide background and disclosure information, which includes any history of discipline or "white collar" violations. The Bureau reviews applications to ensure that those with egregious backgrounds are not licensed (denial). The Bureau has the power to suspend or revoke licenses, and the power to censure and fine licensees for current misconduct. The Code also provides for on-site examination of brokerage and investment advisor firms.
The Division has a dedicated website for investor education that is a comprehensive resource for Iowans to learn about investing wisely and avoiding fraud. This website offers information, publications, and links to additional resources. Agency staff and volunteers also make presentations. Investors who are uninformed face the greatest risk of falling victim to an investment scam or con artist. A well-informed investor is usually a well-protected investor.