House Banks & Banking Committee, February 5, 2026

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1. 0:13:42

   Well, good morning, every- Good morning, everybody. The, uh... Looks like the hour has, take it from Mr. Ralston, the hour of convening having arrived. Um, Trey Rhodes, would you like to give us an invocation this morning, please, sir?

2. 0:13:59

   Let's pray. Lord, we thank you for this day, and we thank you for the opportunity to be here. And we just ask that you guide us and direct us, and, and keep everyone, uh, under our voice safe today, Lord, and our families at home. Um, we just ask that you bless this day, and everything that we do honors you. In Christ's name, we pray. Amen.

3. 0:14:18

   Amen. Amen. Thank you. We got a couple of members coming to their seats. Um, good morning, everybody. Um, this is our, uh, meeting of- Oh, I forgot ... Banking and, uh, Finance meeting that we're having, and we've got a bill to hear today. But first, um, Ms. Nola, would you like to approach and, and tell us, um, your thoughts? And I know you... There was a letter that was sent out, and I'd like for you to... I will give you your time if you'd like to go over that, please.

4. 0:14:46

   Yes, thank you. Do you mind if I sit there and-

5. 0:14:48

   Sure, that'd be perfect.

6. 0:14:49

   Okay. Thank you.

7. 0:14:53

   Something interesting I found out this morning is we share the same birthdate, and I'm not gonna tell you which one is younger. I'll let y'all decide that.

8. 0:15:07

   Oh, thank you. Thank you. Um, thank you, Mr. Chairman, for giving us the opportunity-

9. 0:15:19

   It's my pleasure.

10. 0:15:19

    Again?

11. 0:15:20

    You have to pull it closer.

12. 0:15:21

    Okay. Sorry.

13. 0:15:21

    The mic closer to you, please.

14. 0:15:22

    Okay. Thank you. Thank you, Mr. Chairman, for giving us the opportunity. And, um, if it pleases the Chair, I have copies of the, um, letter should some of the committee not have brought it with them-

15. 0:15:34

    Okay

16. 0:15:34

    ... that we can distribute.

17. 0:15:36

    Sure, that's fine.

18. 0:15:37

    That's fine. I don't know if anyone-

19. 0:15:38

    I think we all got that email, but yeah, that'd be great.

20. 0:15:41

    Yes. Mm-hmm. There you go. Yeah, I think that's it.

21. 0:16:00

    Oh, I'll try to be brief.

22. 0:16:52

    Good morning. Good morning.

23. 0:16:54

    Okay.

24. 0:16:54

    Okay, proceed.

25. 0:16:55

    Um, thank you, Mr. Chairman.

26. 0:16:56

    Yes, ma'am.

27. 0:16:56

    And, and thank you, uh, for the opportunity again to address you. I'm Nula Zaheras. I serve as the, uh, Assistant Commissioner of Securities and the Director of the division that oversees securities, charities, and cemeteries, and I've asked our senior enforcement attorney, Christina Heard, to be up here with me to a- a- be able to answer any questions that, you know-

28. 0:17:19

    Sure. Glad to have you here.

29. 0:17:19

    Thank you.

30. 0:17:20

    Thank you.

31. 0:17:20

    Yes, so, um, I wanted to start by saying that, um, I've been actively involved with securities since 2005. My first experience in securities with, with government, which put me in direct contact with har- harmed Georgia investors. My experience is also in industry, which gave me a deeper understanding of how companies form, how they operate, and how they grow their businesses while they're trying to navigate their regulatory obligations and at the same time have a duty to their shareholders.

32. 0:17:54

    So the Securities Act is a statute that regulates conduct, not merely institutions. It's designed to be investor protection focused. You know, we maintain the markets, and facilitating capital formation is never to the detriment of any investor, including the Georgians that you represent. You know, securities regulator, regulators are actually conduct regulators. Banking regulation is designed to ensure that banking institutions have the financial strength to survive economic shocks to meet its obligations.

33. 0:18:30

    You don't want people to run to the banks to get their money, uh, if something catastrophic happens. So banking regr- uh, regulators are more prudential. Although both have very important func- missions, and they do appear superficially similar, both serve different purposes with fundamentally distinct features. But that doesn't mean that they can't work together. They can work together. The key is, how do they work together?

34. 0:19:01

    So HB 934 legislation would, uh, is legislation that would take the oversight of securities market and the stewardship of investor protection away from the Secretary of State and move it to Banking and Finance. That is one option, to make the conduct regulator a subordinate of the pru- prudential regulator. Another option would be to coordinate rather than subordinate. And as I address in the letter that I sent to you, a copy of which now you have in front of you, you know, making such a move should be well thought out, thoroughly researched, and treated with the seriously, seriousness such a move deserves.

35. 0:19:46

    Um, excuse me.

36. 0:19:49

    Moving an agency to a new parent entity is a complex pro- process. As I also stated in my letter, it's not as simple as moving it. You have to consider the legal and operational challenges, as well as the potential adverse effects on the taxpayers. A move creates operational and technological disruptions. It could lead to the loss of institutional knowledge. Taxpayer funding will be needed because transitioning often results in disruptive, uh, uh, d- I'm sorry, duplicative expenses and destroys existing economies of scale.

37. 0:20:32

    On the other hand, improving coordination would keep the existing model and put measures in place to strengthen the communication and collaboration between both agencies. Improving collaboration is a cost-effective approach to the taxpayer. It is la- less disruptive approach because it involves the agencies harmonizing procedures, establishing strategic communication protocols, and executing interagency agreements.

38. 0:21:05

    That would not involve moving physical assets, onboarding staff, migrating sensitive data, and procuring systems that are unique to each, all of which will at some point require funding. As my letter states, a fiscal note for this move is critical. It provides an objective written estimate of the financial, operational, and budgetary impact of the move. Basically, it's the price tag that helped you as legislators understand the costs and the savings or even the revenue losses so that the move does not have a negative impact on the overall state budget.

39. 0:21:47

    That is why I call in my letter for a study committee. Conducting a study prior to the consolidation, uh, th- to the consideration of adopting this legislation and conducting that study with a group of st- stakeholders of both agencies is fundamental, is a fundamental component in considering merging these agencies. It would study the high complexity of regulations and operations of each, identify any risks that could happen with a, you know, um, a migration or, uh, moving it, and it would coordinate a cost benefit analysis to determine whether it is more cost effective to provide the d- the division with additional resources, or is it more cost effective to put the divisions together.

40. 0:22:39

    I thank you for your time, and I can answer any questions that you may have for me.

41. 0:22:44

    Thank you, ma'am. Um, let's see, from the committee I have 25.

42. 0:22:49

    Thank you. Thank you, Chairman. I have a couple questions. I, I read through your letter the other day and I reread through it just now. Um, and I see that it says, um, "The Secretary of State's office works tirelessly to protect investors every day." A- and given that the SEC complaint alleges First Liberty sold unregistered securities, um, for over a decade, how do we reconcile that tireless protection with all the investor harm, $140 million of investor harm that we know of, maybe more? H- how do I reconcile that?

43. 0:23:19

    So that's a r- that's an excellent question actually, and that's what we look at every day. You, um, there are many ways in which you can reconcile that, and it involves not just one super agency doing all the work. It requires a collaborative approach is w- and which is what we have. We work with our other regulatory partners like the SEC, uh, like, um, you know, uh, the Department of Justice, I can go on and on and on of the agencies that work- we work with, to have dialogues about, "We're seeing this out there.

44. 0:23:53

    You need to take a look 'cause it looks like it's this way." So collaboration is one way. Um, another way is also, um, through education. You, one of the most effective ways is to stop, um, is, is to help stop fraud, is to make the public aware, the consumer aware that this is out there, and talk to them about things that they should do, you know, when considering making an investment. Uh, like, "This is, well, these are the things you need to look at.

45. 0:24:25

    These are the types of questions you need to ask. And if you're still not sure, these are the agencies that you need to, you know, to have." Now, in this particular matter, and in other matters, like I said, we work very, um, uh, in tandem with the SEC. And in this particular case, the SEC notified us on July 1st that it was planning to, you know, take action. Uh, and because we have our monthly calls with the SEC enforcement, we at that point spoke together about who's gonna do what in this matter.

46. 0:24:58

    W- well, why weren't you guys a party to the initial action of the SEC then? If, if there's such a, a great coordination with the SEC in, in what you guys are doing, like, wouldn't there be, wouldn't you be a party to the SEC action since you're the regulator on the state level?

47. 0:25:13

    So they are, they have their federal laws, and they need to do, you know, they follow the federal act. But we have state laws what allows us to do things, too. So while they're doing their, um, as what we told them, that, "Yes, you may go ahead and do this, but we are planning to open a state, you know, investigation." Because, yes, they will have their, um, you know, action and d- have their findings and do at the end what they need to do on the federal level. But in addition to, um, bad actors, you know, maybe violating the federal act, they also violate the, the Georgia, the s- the state act, right?

48. 0:25:53

    So we have the ability to do our own enforcement.

49. 0:25:56

    But they violated-

50. 0:25:57

    They're, they're accused of violating it for 11 years. And so like, uh, like were there any, were there any enforcement actions done to them prior to the federal coming to you and saying that there's potentially a problem here?

51. 0:26:13

    So we did not receive any complaints about that, and if you're asking, I think you're asking, is, your question may be asking is how do we catch a Ponzi scheme or something like that before it happens?

52. 0:26:25

    I mean, they advertised on the radio. I mean, it was-

53. 0:26:27

    Right

54. 0:26:27

    ... it wasn't a hidden-

55. 0:26:28

    Yes

56. 0:26:28

    ... thing whether it was a Ponzi scheme or not.

57. 0:26:30

    Right, right, right.

58. 0:26:31

    But, uh, why was... I'm not asking how do you catch them.

59. 0:26:34

    Okay.

60. 0:26:34

    I'm saying why was this not caught?

61. 0:26:36

    So we, as, it was not, we did not receive a complaint or a referral about it.

62. 0:26:43

    11 years.

63. 0:26:43

    In the cases where we receive complaints, we, our protocol is to immediately open up an investigation and look into it. We get complaints from the public. We get complaints from, uh, members of the legislature. We get refer- all- referrals all the time from, um, the different regulatory agencies, our partners. In this case, with First Liberty, the only complaint that we received, I mean, the only that we found, was, um, from the SEC on July 1. And I could have my attorney speak more legally on that if that would help.

64. 0:27:17

    I, I don't think that's- Mr. Chairman, I got one more and I'll, I'll Okay. One, one more question. Can we have- Yeah ... this thing's lit up like a Christmas tree. Yeah, I'm sorry. So-

65. 0:27:23

    I'm sorry. Oh, God.

66. 0:27:24

    And then I gotta present, so. Um.

67. 0:27:26

    Sorry.

68. 0:27:27

    Is there something, if this was under a different regulatory way, if it was under Department of Banks and Finance, like what, what would be lost with what you can do versus what they could do in this situation?

69. 0:27:41

    So would you like to answer that? Yes. That's a legal And, um-

70. 0:27:44

    'Cause, 'cause most, I think most states have it this way, under Banks and Banking, a plurality one.

71. 0:27:49

    I, I- But- ... I'm aware of a document that you received that shows what, where the states have it, and, um, I would say that I think maybe 21 states might have it together, uh, where 29 states do not have it together. And it's great to have a list, but that's a list. And, and so in looking at that list, that provides you, yes, data on where, you know, how securities and works with other types of regulatory agencies. But it would, I, I would think that taking a deeper look into how they are there in the 21 states, for example, you need to look at their regulatory framework.

72. 0:28:29

    You know, some states, they're together where they're equal, and they report to a super regulator, a bigger regulator that has many financial institution areas reporting to it. In other states, they, um, have it where the super, the top regulator is the, the Department of Banking, 'cause that's the name of the organization, and the securities and other areas report up to that. So, uh, I would look at that s- type of structure. That's why I think a study committee could look at that information, that could take that great list, it's a great list, and it could provide you with, "Oh, this is how they do it." But how do they do it?

73. 0:29:06

    And how does it work in those states? And maybe we should do it like, you know, this state does it, or maybe we should do it like that state does it. But the committee should also look, in looking at all the other states that so many states do it that way, they should also look at the 29 other states who don't do it that way and ask them, "Why did you choose not to go this route and you went the other route?" And that way you have a, a level playing field or a bigger vantage point of deciding which is the best way, and if you're going to m- put it together with banking and finance, under what structure is the best way.

74. 0:29:41

    But I think only five had it under Secretary of State, uh, today. I think only five states had it.

75. 0:29:45

    Yeah.

76. 0:29:45

    And there, and there are 10 with Georgia the way we do it now.

77. 0:29:48

    Yeah.

78. 0:29:48

    So they're not all 29 are doing it the same way.

79. 0:29:51

    No, I'm not saying they're trying to do it the same way.

80. 0:29:52

    Right. I just wanna make that-

81. 0:29:53

    Yes, yes. I agree

82. 0:29:53

    ... yes, ma'am, I just wanted to clarify that.

83. 0:29:55

    Yeah, I agree with that.

84. 0:29:55

    I had to talk.

85. 0:29:56

    Yeah, yeah.

86. 0:29:57

    22.

87. 0:29:59

    Uh, uh, thank you, Mr. Chairman, and, uh, thank you for the letter because it did beg some questions. But since we, you bring up your letter, this, uh, this fraud that happened from First Liberty, uh, my question is quite simply, um, because I'm not an expert in securities law, but I know there's some safe harbors. But, uh, we're all in agreement that these securities should have been registered, correct?

88. 0:30:22

    Yes. They, they conducted unregistered activity.

89. 0:30:25

    And when, so they never registered with you?

90. 0:30:28

    They did not register with the Secretary of Georgia.

91. 0:30:31

    Secretary of State.

92. 0:30:32

    They did not register with the SEC 'cause it requires SEC registration as well.

93. 0:30:36

    A- and my question is, given the fact that they advertised all over, all over media, um, incessantly, did it never beg the question that these people are selling securities? And oh, by the way, we look in our files and, and they never registered with the Secretary of State.

94. 0:30:55

    Mm-hmm.

95. 0:30:55

    When did you first go investigate them?

96. 0:30:58

    So we first investigated them again when the SEC brought, raised it to our attention on July 1, which we immediately opened up, uh, an investigation on that date and, uh, got information out. And by July 20, by July 3rd, we received 22 complaints. And by, um, uh, since then, we've issued, uh, we've received 150 complaints. But Christina, could you-

97. 0:31:20

    A- a- that's af-

98. 0:31:21

    Yeah

99. 0:31:22

    ... for, excuse me now because I'm, I'm directing my question to you.

100. 0:31:25

     Mm-hmm.

101. 0:31:26

     The, that's after the, there's a run on the bank. You used the illustration of, of Safety and Banking Department.

102. 0:31:31

     Mm-hmm. Mm-hmm.

103. 0:31:31

     That's after the horse is out of the barn door. Did it never occur, y'all have an investigative divi- division. I know for a fact that-

104. 0:31:39

     Mm-hmm

105. 0:31:39

     ... the Department of Banks and Fin- Banking and Finance-

106. 0:31:42

     Mm-hmm

107. 0:31:43

     ... they will, they will go investigate-

108. 0:31:45

     Mm-hmm

109. 0:31:45

     ... somebody that appears to be acting like a bank-

110. 0:31:48

     Mm-hmm

111. 0:31:48

     ... and shut them down, cease and desist orders.

112. 0:31:50

     Mm-hmm.

113. 0:31:51

     Did it never occur to y'all to go check and see whether or not these people were conducting legal activities and why they did not register? That's my question.

114. 0:31:59

     Okay.

115. 0:31:59

     You had an investigative arm. Why did they not investigate before the Ponzi scheme fell apart?

116. 0:32:05

     So we, um, you mentioned some of the, the advertisements. We've become aware of those throughout our investigation. Nobody on our team saw those advertisements before the SEC informed us. So that's-

117. 0:32:18

     They spent-

118. 0:32:19

     That's, that's-

119. 0:32:19

     ... millions of dollars-

120. 0:32:21

     Right

121. 0:32:21

     ... advertising.

122. 0:32:22

     So it's, um, but they were not ad- ... Uh, nobody on our team was enga- saw those advertisements. When we do see advertisements or we do hear things on the news, we'll text each other at night, WSB link, whatever, whatever it is. Um, but I can assure you that we, we never saw an advertisement before, uh, the SEC informed us.

123. 0:32:44

     I'm incredulous. I'm, pardon me, but I'm just stunned that y'all s- were not aware of this advertisement for this, um, investment, quote, opportunity. But that, that, I rest my-

124. 0:32:57

     Thank, thank you

125. 0:32:58

     ... I rest my questions.

126. 0:32:58

     Okay. We've got, let's see, I'm trying to keep these in order. Number 17.

127. 0:33:07

     Thank you, Mr. Chairman.

128. 0:33:08

     Yes, ma'am.

129. 0:33:09

     Um, just a few questions. I know I only probably can get about two in, but do you know whether or not there was any other agency that was aware of this investigation or this scheme?

130. 0:33:22

     So it is my understanding, uh, that another agency was aware that, uh, they received a complaint and was aware that something might be amiss, uh, it is, but we did not receive a referral. Had we received a referral from any agency that got this, we would've immediately opened up an investigation.

131. 0:33:43

     Was, was that agency Banking and Finance?

132. 0:33:46

     It is my understanding from what I've read outside in the media that that was it.

133. 0:33:51

     Okay. Just one other question. Can you, um, can you tell us what the budget is for Securities and Commodities for the Secretary of State?

134. 0:34:00

     So these, the division does not just do banking and commod- uh, sorry, securities and commodities. We also oversee charities and cemeteries. And so for all four areas, our budget that is allocated from the legislature or from, you know, is $1.2 million.

135. 0:34:20

     Okay. One, one final, and then when ... Were the two agencies talking then? If they received it and they had that complaint with Banking and Finance, were they in communication with the other agency, or do you guys communicate when something like that occurs?

136. 0:34:35

     So our approach, and I'm big on, you know, collaborating, so as soon as we get a re- a complaint, I immediately, we try to find, if it's not us, we try to find where it is. And there have been times that we have received some complaints that seem to be, you know, a bank. It may not be a bank, but it appears to be that bank and I've reached out to, you know, Banking. There have been times that I've received complaints that, you know, we don't really know what they are. They're not securities, they're not charities, they're not cemeteries, and we work with the AG's office.

137. 0:35:10

     So we do have a habit of, we do constantly talk to our other agencies.

138. 0:35:16

     Thank you.

139. 0:35:17

     Thank you. Now, this specific bill, though, talks about securities and commodities. We're not talking about the grave, the cemeteries or-

140. 0:35:24

     Mm-hmm

141. 0:35:24

     ... any of that-

142. 0:35:25

     Yeah

143. 0:35:25

     ... part of you. We're just talking about-

144. 0:35:26

     Okay

145. 0:35:26

     ... Department of Banking and Finance-

146. 0:35:30

     Right

147. 0:35:30

     ... overseeing this part. I just wanted to make that clear.

148. 0:35:33

     Thank you.

149. 0:35:33

     Okay. Uh, number 24.

150. 0:35:37

     Okay, thank you, Mr. Chairman. Um, yes, thank you.

151. 0:35:40

     Yeah.

152. 0:35:41

     Appreciate that, you guys being here this morning. I just had one question and it, it came up with the charities and the cemeteries, but I did read the letter a couple times, uh, that you sent. But in the letter you talk about the interwoven, the, the division having several different functions, but you did talk about the charities, the cemeteries, and the securities.

153. 0:35:59

     Mm-hmm.

154. 0:36:00

     Uh, what percentage of time is actually spent on security enforcement versus those other agencies, would you say?

155. 0:36:09

     Well, well, um, because we have a small team, we, you know, everybody, the registration analysts, you know, do not just s- securities, but they also do all three.

156. 0:36:20

     Three jobs.

157. 0:36:20

     And the enforcement, uh, you know, team does all three matters. So in the percentage of time, I think the senior attorney can tell you more.

158. 0:36:27

     Yeah. I would say securities is, um, the bulk of it, probably, um, somewhere between 65 and 70%, and I'm just spitballing here. Um, cemeteries is the other very large part of it. Um, probably a solid 20%. Um, and then the, the smaller, uh, portion, maybe 10%, is charities.

159. 0:36:51

     Okay.

160. 0:36:51

     At least on the enforcement side.

161. 0:36:53

     Okay. One other question, Mr. Chairman.

162. 0:36:55

     Sure. One more.

163. 0:36:56

     Uh, I think you mentioned in the letter that the system, uh, something like could not be picked up and moved. What, could you-

164. 0:37:03

     Yes

165. 0:37:04

     ... talk about that?

166. 0:37:04

     The, the, um, right, the platform that we use to do all three, we, um, for our filings so that we can give them licenses and also where we record our, um, enforcement cases, 'cause we put them on a, in, in, on a platform to, with varied statistics. Those are pr- th- they belong to the Secretary of State 'cause other divisions within the A- Secretary of State's office use that. So I, I'm not sure how that would move over.

167. 0:37:37

     Okay.

168. 0:37:37

     Yeah.

169. 0:37:38

     Thank, thank you.

170. 0:37:39

     15.

171. 0:37:42

     Thank you, Mr. Chairman. Uh, thank you all for being here this morning. My question, uh, is how do most regulatory agencies get involved in something? Is it because somebody complains, or w- what- What do you have that's preemptive? I, um, I don't know of any regulatory agencies that are preemptive, but they do respond to complaints. Am I missing something or what?

172. 0:38:10

     So most of our matters come in in two ways, predominantly through complaints. You know, and, and trust me, you know, complaints come in on a daily basis. Um, also we have, um, our industry partners are out there and if they see something, they will notify us, uh, and, and let us know that, that something is out there and bring, raise it to our attention. And finally, other regulatory agents, we are always getting, um, referrals. Uh, just yesterday I received five referrals from the attorney general's office that we've opened up to look into.

173. 0:38:47

     But, but that's how, that's the, the typical thing.

174. 0:38:49

     Is there anything about your current authority that you are missing that the banks and banking, that the, uh, that banking has that you don't have?

175. 0:39:01

     I can't speak to that or answer that because I don't know exactly the authority, uh, that, um, you know, banks and banking has. I, I'm not privy to that information. But if we, you know, if I was able to have a conversation and we could collaborate, we could, I could answer that better.

176. 0:39:18

     Thank you.

177. 0:39:19

     Well, I think there'll be plenty of time for collaboration. Number 18.

178. 0:39:26

     Uh, thank you, Mr. Chair. I don't know if mine is just a, a question or a comment, but, um, I hear my colleagues on the other side, um, making suggestions about who's wrong and who's what. But, you know, crooks don't advertise. I just want everybody to know that. Crooks don't advertise. And just like we get up and come to work, they get up and go to work to try to do something legal. And so if somebody doesn't complain, then they have no reason to check and verify anything.

179. 0:39:56

     I don't care how much money it was. If it was 100 million, 500 million. Let's see, Bernie Madoff, he was right there with securities. He still stole money and then nobody complained because nobody missed anything. Everybody was getting paid. And so we can pick and choose, you know, what we wanna do, but to move a whole agency under, under one specific thing out of all these years, one thing, it's something deeper going on here.

180. 0:40:24

     We're just talking about a section.

181. 0:40:26

     Me too.

182. 0:40:26

     Securities and commodities. We're not talking about a whole agency.

183. 0:40:30

     Same thing.

184. 0:40:31

     22 other states do it this way.

185. 0:40:33

     Let, let me see the paper.

186. 0:40:34

     Well, 21, plus we would be 22.

187. 0:40:36

     Yeah. Three, three, three do it different, four, four do it different, 10 do it different, and five do it different.

188. 0:40:41

     Well, Mr. Douglas, what we're doing now isn't working.

189. 0:40:45

     Off of one incident?

190. 0:40:46

     $150 million.

191. 0:40:48

     I don't care if it's 500 million.

192. 0:40:50

     Well, I think 300 Georgians would.

193. 0:40:52

     Well, that depends on the Georgians that lost the money.

194. 0:40:54

     Oh, touche. Okay. Thank you for your point. Okay, let's see. Number nine.

195. 0:41:04

     Thank you, Mr. Chairman.

196. 0:41:05

     Ma'am.

197. 0:41:07

     Why y'all didn't tell us about it so we could have asked too?

198. 0:41:10

     Number nine.

199. 0:41:11

     I didn't, I didn't hear-

200. 0:41:12

     Thank you for being here this morning. Um, in your letter you mentioned that, um, all the activity since January would be, um, at risk of nullification. What does that statement rest on?

201. 0:41:26

     Christina.

202. 0:41:27

     Could you repeat the question?

203. 0:41:28

     Please, please. I, I didn't hear it either.

204. 0:41:30

     In, in the letter that we received-

205. 0:41:32

     Yes, ma'am

206. 0:41:32

     ... it says that, um, all activity since January would be at risk of nullification. I understand what nullification is, but why or how did you come to that determination?

207. 0:41:43

     Um, in the language of the bill, on line, um, 37, it states that, um, all orders of the secretary of state that are in effect on December 31, 2025, or are set to go into effect on or after January 1st, 2026, um-

208. 0:42:03

     Are transferred

209. 0:42:04

     ... are, are transferred. Um, and then there's, so that's the, where the date comes from, that January 1st date, but there's other language specifically about nullification. Um-

210. 0:42:14

     One second. Um, can you read the LC number?

211. 0:42:16

     I'm gonna present that.

212. 0:42:17

     Yes.

213. 0:42:17

     I'm gonna present that bill in a few minutes, so if you wanna hold off on that question.

214. 0:42:20

     Oh. Yeah, I'm on... Yes, that's fine.

215. 0:42:22

     Yeah.

216. 0:42:23

     LC02.

217. 0:42:23

     Let's see. Um, I think 29 has been holding.

218. 0:42:30

     Oh, thank you. Um, I's got a couple questions. So this First Liberty, um, they, I guess they have two arms. They were, one of them was sitting under bank and finance, which is the banking portion of it, and then their alleged stock would be under you. Is that correct?

219. 0:42:50

     No.

220. 0:42:50

     I believe from what I understand I read out in the public is that they were not, um, maybe they were not part of banking and finance. Um- My understanding is, um, the, uh, buildings and loan organizations were carved out of the banking laws in, I think, 2016. And that is the loophole which allowed, uh, First Liberty Building & Loan to operate without any oversight from banking in the loan capacity.

221. 0:43:22

     Um, and, uh, with the securities angle, we were not aware, like I mentioned earlier, we did not see any advertisements. Um, none were brought to our attention. No complaint was filed, um, until people stopped getting their money. Um, because people, I've spoken to 100 investors myself, and what happens in a Ponzi scheme is they're receiving their interest month checks every single month, like clockwork. I asked them, "Any red flags?" Yeah, there, I had red flags for sure.

222. 0:43:55

     Um, but every time I asked whoever at the company a question, they were able to give me a kinda satisfactory answer, and I was receiving my checks every month like clockwork. If there was an issue with me getting my check, they would fix it right away. So people-

223. 0:44:12

     You know, crooks are very good at pulling the wool over folks' eyes. Um, and even the most smart person in the room is susceptible to becoming a victim of, of fraud because of how smart these people are.

224. 0:44:25

     Sure.

225. 0:44:25

     Mm-hmm.

226. 0:44:25

     And so, so since they wasn't registered, y'all didn't do like an annual audit like you would on somebody that's registered, correct?

227. 0:44:32

     That's correct, because we, we have, our act allows us to go in and regis- and do examinations of registered firms. We have that authority. Um, the way that we would go into an unregistered firm is we would have to open up an enforcement investigation and go th- in through our investigative path.

228. 0:44:52

     And that could only be if there was a complaint that you received, correct?

229. 0:44:55

     It would be through a complaint. And as, um, Christina alluded, schemes like this are set up, uh, to create an illusion, and they're, you know, they're schemes that pay.

230. 0:45:07

     Sure.

231. 0:45:07

     So at the beginning, you know, people are getting their money, and everything is looking legitimate. And even the employees that work for these companies think that everything is okay.

232. 0:45:17

     Okay. So-

233. 0:45:17

     It's when the money runs out.

234. 0:45:19

     So I, I, I know two banks, two, uh, independent banks.

235. 0:45:24

     Mm-hmm.

236. 0:45:25

     They called y'all and inquired about them because they were calling them about some participation loans and stuff like that, and called. And I don't know, I know they didn't file an actual complaint, but I do know that they called and asked y'all last year and the year before if this was, you know, if they were operating or something or other. And somebody was supposed to get back with them, uh, to figure it out, or they'd never heard of it, they weren't registered. Something along that line. Um, because one of the presidents of the bank told me that that's how he knew, well, uh, before they even filed.

237. 0:45:53

     Mm-hmm.

238. 0:45:53

     And he said he had called the state. Now, he coulda called banking side, he coulda called securities side. But I'm just saying, I, I think there was knowledge out there-

239. 0:46:01

     Mm-hmm

240. 0:46:02

     ... that they existed, that they were selling stocks. Um, but, but you're, but what you're saying is y- y'all, you can't do anything until you have someone actually tell you to check into it, or I call and complain about something.

241. 0:46:16

     What I'm saying is once we get awareness that something is out there, we immediately act. And if the two banks are telling you that they called someone at the state, and maybe they think they have suggested they called us, if you could provide me with that information-

242. 0:46:30

     Sure

243. 0:46:30

     ... I'll go back and check-

244. 0:46:32

     Okay

245. 0:46:32

     ... with my team to see did we receive that call.

246. 0:46:35

     Thank, thank you. Okay. A couple more questions, then I'm gonna present our bill. 23.

247. 0:46:40

     Thank you, uh, Assistant Commissioner. Um, I'm not sure who the commissioner is, for starters. Who is the commissioner of securities?

248. 0:46:47

     By, by law, under the Georgia Securities Act, the commissioner is the secretary of state.

249. 0:46:53

     Okay.

250. 0:46:53

     And he can, um, appoint an assistant commissioner at the approval of the governor. The governor has the final say on that.

251. 0:47:01

     Okay. So first of all, just a statement. I, I think I might be the only person in the general assembly who's a founder and CEO of his own bank.

252. 0:47:09

     Oh.

253. 0:47:09

     Um, and we ran one of the cleanest banks in the entire country. And that was predicated upon being able to identify who you're doing business with-

254. 0:47:16

     Mm-hmm

255. 0:47:17

     ... and, and sort of getting a sense for your customer and knowing who the rascals are.

256. 0:47:22

     Right.

257. 0:47:22

     Identifying the, the bad actors preemptively. And I think we've met probably on two or three occasions-

258. 0:47:28

     Yes, we have

259. 0:47:28

     ... at least starting back, I think, September the 5th.

260. 0:47:31

     Yes, sir.

261. 0:47:31

     And, uh, uh, from the personal experience, I've dealt with the Department of Banking and Finance.

262. 0:47:37

     Mm-hmm.

263. 0:47:37

     I know what it means to have them come into our bank.

264. 0:47:40

     Mm-hmm.

265. 0:47:40

     And, and in anticipation of that, making sure that we're running a very clean shop.

266. 0:47:44

     Right.

267. 0:47:44

     So I have tremendous regard for the Department of Banking and Finance.

268. 0:47:47

     Mm-hmm.

269. 0:47:47

     But I also have great appreciation for the, the good work that y'all have done at the Secretary of State's office in many, in many ways. Uh, the SPEAR Act was a good bill.

270. 0:47:55

     Mm-hmm.

271. 0:47:56

     Uh, uh, financial education for seniors.

272. 0:47:58

     Right.

273. 0:47:59

     I've, I've seen y'all do things like that that are quite good. So I don't think we're... I'm not, I'm not trying to say who's responsible or why did we miss this.

274. 0:48:07

     Mm-hmm.

275. 0:48:08

     But since we started meeting in September, I still don't... Uh, I've, I've, I've encouraged meetings with the Secretary of State's office.

276. 0:48:14

     Mm-hmm.

277. 0:48:14

     Uh, and other organizations, including, uh, uh, AG's office, et cetera.

278. 0:48:19

     Right.

279. 0:48:19

     And just haven't had any results, sort of seeing that all come together. And I'm thinking in, in anticipation of these things, because we just had a $340 million Ponzi scheme, I think-

280. 0:48:30

     Mm-hmm

281. 0:48:30

     ... conviction in the last two weeks or something.

282. 0:48:32

     Mm-hmm. Yes, sir.

283. 0:48:33

     So clearly these things are happening. They're gonna happen more.

284. 0:48:35

     Mm-hmm.

285. 0:48:36

     And I don't really see a system or a plan in place to, to preemptively identify these things-

286. 0:48:42

     Yes

287. 0:48:42

     ... and, and eliminate these bad actors before they can get too far gone.

288. 0:48:46

     Mm-hmm.

289. 0:48:46

     The, the, the nature of the job at secretary of state, it's a broad, broad job with a lot of responsibilities.

290. 0:48:52

     Mm-hmm.

291. 0:48:53

     And we have a shrinking number of banks in Georgia.

292. 0:48:55

     Mm-hmm.

293. 0:48:56

     And we have really smart people at the Department of Banking and Finance-

294. 0:48:59

     Mm-hmm

295. 0:48:59

     ... who are really capable at this.

296. 0:49:01

     Mm-hmm.

297. 0:49:01

     I wonder, can y'all not, not see the obvious logic of, uh, taking an organization with really talented people with a, with a smaller number of banks to regulate-

298. 0:49:10

     Mm-hmm

299. 0:49:10

     ... and just see the logic of moving that over? Because to me, it's very obvious.

300. 0:49:15

     So I would say again that I, I'm a more data-driven. I like to look at everything through a study and, and getting all the information, you know, uh, in front of me. That's why I suggested a study committee. And I am, do not doubt that, uh, Banking and Finance has very outstanding people. But s- the secretary of state has a very outstanding team, too. We have over combined 45 years of experience.

301. 0:49:46

     Uh, the team works, has been, sits on some very important NASA committees. It collaborates with other states. It leads some multi-jurisdictional enforcement actions. Yes, we, we, we are, we are a good team, too. We are knowledgeable, too. Um, and I'm, um, concerned that a move would, um, take the historical knowledge that, or, or the, or the institutional knowledge that the, and the, the, um- I guess the associations and the, uh, that they've established and the trust that they've established with other regulatory agencies and with even the investors, and, you know, that that would get lost, you know, in any kind of transition.

302. 0:50:31

     We respectfully disagree with that, but... And I'm gonna go over my bill in just one minute, but thank you for your presentation. I have one more question, and then I'm gonna present, if we have any other time. Number 22.

303. 0:50:43

     Uh, thank you, Mr. Chairman. Uh, you know, n- n- not r- we're talking about people here. If the people move from one r- report from one person to another, nothing changes in that institutional knowledge. So if just people move from one department to another, as, as been the case historically in this general assembly, responsibilities have changed, but people move over, you're not losing any institutional knowledge. But I want to go back to your attorney's comment about the 2016, uh, change where... And I carried that housekeeping bill 10 years ago. We've been for over, since I've been in this general assembly, the Department of Banking and Finance has been modernizing, streamlining, cleaning up the code that o- that regulates not just banks, not just deposit and credit unions, which depository institutions, but money transmitters, um, our mortgage lenders, our Georgia Installment Lenders Association, which is another example of a, of a, of, of, of basically a regulatory entity that moved from one department to the Georgia Department of Banking and Finance seamlessly and efficiently and, and, and, and it's been a good return for the Georgia taxpayer.

304. 0:51:49

     That being said, this nomenclature that was cleaned up of d- of buildings and loans in 2016, it's the same time we took out the use of telegraphs and other archaic terms.

305. 0:52:00

     Mm-hmm.

306. 0:52:01

     Buildings and loans have not been depository institutions in this state for over 75 years, nor was there any allegations that First Liberty was accepting deposits-

307. 0:52:11

     Right

308. 0:52:11

     ... acting like a bank.

309. 0:52:13

     Right.

310. 0:52:13

     So let's don't throw out a veiled, uh, allegation that the Department of Banking and Finance did something wrong in this case-

311. 0:52:19

     Yes

312. 0:52:19

     ... or it should have been reported to them. They had no regulatory responsibility or oversight of somebody using a trade name that was not a regulated entity.

313. 0:52:29

     Yes.

314. 0:52:29

     That being said, the responsibility from whomever's, um, overseeing our securities protection in the state of Georgia is about those people that are selling unregistered securities. I will go back to the fact this has been advertised heavily for years, that you can invest, and somebody at some level in state government should have gone in and said, "Are you registered?" That is where the ball got dropped, in my opinion. Thank you, Mr. Chairman.

315. 0:52:57

     Thank, thank you. And thank you all for your presentation. And if it pleases the, uh, group, I'm gonna present my bill, and hopefully we can get this thing out. And, um, so I'm gonna sit here, and I'm gonna present House Bill 9, House Bill 934. LC number is 620362S. And we have discussed this bill, um, in bits and pieces, and I'm gonna hit the highlights.

316. 0:53:29

     And hopefully, um, if you have any questions, we can get those resolved for you. But this bill simply is going to transfer the regulations and securities and commodities from the Secretary of State's office to the Department of Banking and Finance to provide for an advisory board and to provide for conformity, to bri- provide for an effective date, and to repeal any conflicting laws. Um, the powers or the functions and duties of the Secretary of State as they exist on June 30, 2026, with regard to securities regulations pursuant to Chapter 5 and commodities regulation pursuant to Chapter 5A of Title 10 are transferred to the department.

317. 0:54:13

     When I say department, I'm talking Banking and Finance, effective July 1, 2026. On and after July 1 of 2026, the department shall regulate securities and commodities in Georgia and may coordinate with the Secretary of State for access to and maintenance of records related and commodities regulation for the department to f- to fill, fulfill its duties. On and after July 1, 2026, this is important, any ongoing securities and commodities in investigations with the office of Secretary of State shall immediately transfer to the department.

318. 0:54:53

     The commissioner of the banking and department shall appoint an advisory board consisting of up to 12 members. Of such, at least one shall have securities regulation. The remaining members shall have qualifications as the commissioner may determine.

319. 0:55:10

     All persons employed by the Secretary of State in capacities which relate to the functions transferred to the department pursuant to this subsection on June 30, 2026, shall on July 1, 2026, become employees of the department in similar capacities as determined by the commissioner. And when I say commissioner, again, I mean the Commissioner of Banking and Finance. The administration of this chapter shall be vested in and who is designated as the Commissioner of Securities.

320. 0:55:45

     Now that is the bill. We have discussed it, um, in a nutshell. We have asked, um, questions. Um,

321. 0:55:56

     22 other states, if, if we go this way, would be doing it the same way. Um, obviously we have failed. I know some people, it might even be more than 300, because some people might have been embarrassed to come forward and say, "Hey, I was one of the ones that was duped." Um, you know, they could be saying that. And also, I think it is, um, imperative that we have this up under a department- versus having it under a constitutional officer who may or may not receive any contributions.

322. 0:56:27

     And I just think it makes common sense, and I think that's the way we need to go.

323. 0:56:33

     Thank you, Chair.

324. 0:56:36

     Do I have any more issues or questions?

325. 0:56:40

     I got some.

326. 0:56:41

     All right, I'm gonna go to my friend, number 18.

327. 0:56:43

     Okay. Thank you, Mr. Chair. Um,

328. 0:56:49

     um, I just, I just have one thing about the bill, um, that I've been looking at and, and, uh, I did a little research on. I... Let me just state this for the record. I have worked with, uh, the new commissioner of bank, banks, banks and banking over the years, and he's incredible. Institutional knowledge he has. Um, by far, he's the smartest person in this room today.

329. 0:57:16

     Even smarter than Mr. Ridley?

330. 0:57:19

     He, he might have Ridley beat. He might-

331. 0:57:21

     Little bit.

332. 0:57:22

     Right? Little bit. Uh, about, um, the ins and out about banking, um, and finance. But the suggestion that we heard earlier of a study committee to make sure we get it right. Something needs to happen. I'm not saying nothing needs to happen. Something needs to happen, but I think if we take the time to make the appropriate move, if we're gonna make the move, or vet and see what works best for our state, it just doesn't fly off the hinges because one thing happened.

333. 0:57:59

     Um, I know millions of dollars were, uh, gone. But, you know, if you got in early, you got paid. You got in late, you didn't.

334. 0:58:09

     Right.

335. 0:58:09

     It's like any other scheme you do. But, um, I think we need a one-off if we're gonna do something like this because of the touchiness, and the Secretary of State's office is elected by the people, and, um, the commissioner is appointed, and then he's gonna appoint 12 people. So whoever's in power at the time can hire all their buddies to fill this whole group. And, you know, if you wanna do it now, that's fine, because things are changing.

336. 0:58:40

     So if you guys wanna go down this rabbit hole and, and send all your stuff and change the way things operate, because tomorrow's gonna be a different day, and we have to be back in here for you guys to try to change it back. So let's make the right decision first. Let's take the time to study this and make the appropriate move. That is my suggestion.

337. 0:59:02

     Well, well, thank you for your suggestion. Um, number 21.

338. 0:59:07

     Uh, thank you, Chairman. Just I wanna ask kind of a question, and you can, uh, for the folks that presented, it can just be a yes or no from where you're sitting. Um, I know that in the banking world, to what, uh, my friend and colleague, Mr. Ridley, indicated about some bankers having questions, I know that we're required to issue, um, suspicious activity reports. I've been a banker for 28 years, and I'm certain that with an enti- an entity like this, that there must have been some suspicious activity reports filed over this long period of time based on the dollar volume and the type of business they were conducting.

339. 0:59:42

     Does that, does your agency ever receive any contacts from potential regulators like the FDIC or the OCC as it relates to SA, S- SARS to alert you since apparently nobody in your agency listens to many radio stations on their commute to work that was having multiple advertisements, and it wasn't immediately figured out by anybody on the staff? Were there other places that were throwing up some yellow flags from those two other regulatory agencies?

340. 1:00:14

     Yes or no, or-

341. 1:00:16

     So we receive, we have collaborative partners. We have-

342. 1:00:19

     You, you can speak right there.

343. 1:00:21

     We do collaborate with other agencies, and we have, we receive, we work with the, we receive complaints from the CFTC, the, um, Department of Justice, the, um, FTC, the, you know, SEC. Um, I can name them all-

344. 1:00:38

     What about the FDIC or the OCC?

345. 1:00:40

     Uh, but no. Have we received... No. FDICs. I know that, but have, which, do they send us any- The FDICs. The FDIC. Every once in a while, the FDIC sends to the thing, yes.

346. 1:00:49

     Okay. Uh, I, I'm, I'm curious if your team has looked to see if you could research if the FDIC had made any inquiries during the last 10 years regarding that entity.

347. 1:00:59

     Yeah. Yeah, we can do that and get back with you.

348. 1:00:59

     'Cause that should've been one of the ways to alert you earlier on.

349. 1:01:03

     Mm-hmm.

350. 1:01:03

     And I, I wanna make this point. I think, uh, the chairman made a great point that I think many have ignored, and I wanna restate it. I think that the states that are looking at ensuring that depositors as well as investors are protected, the oversight, it, to me, it just makes common sense for there to be the director of the banking and finance is not a political figure. Currently in Georgia law, the secretary of state is a political figure. They can receive campaign contributions.

351. 1:01:35

     I think one of the biggest benefits of this legislation is to transfer the oversight responsibility to someone who will never receive a campaign contribution, period. That, that was a very salient point, and that's critical for us to ensure that we make the right steps. This has been studied by many members of this committee at the direction of this chairman, and I don't think this is something that we need to study much more. The Department of Banking and Finance can handle this, and at the appropriate time, Chairman.

352. 1:02:06

     Thank you.

353. 1:02:07

     I, I believe now is the appropriate time.

354. 1:02:09

     So moved.

355. 1:02:10

     We have a motion. Do we have a second?

356. 1:02:12

     Second.

357. 1:02:13

     We have a motion and a second. Do we have any, any more discussion or any amendments to the bill? If not-

358. 1:02:20

     Yes, yes, yes. More discussion. Ooh.

359. 1:02:23

     Point of discussion. Go ahead.

360. 1:02:27

     which one, Mr. Chairman?

361. 1:02:28

     Yes, ma'am.

362. 1:02:29

     Okay. So I notice that we don't have a physical note with this, and there are gonna be some administrative costs to it. We've already heard, heard talk about the platform cannot be used. So we're talking about a component of IT and data to make sure that that is compatible when it goes from Secretary of State and goes over to Banking and Finance. So do... And I didn't see anything in the budget.

363. 1:02:52

     Right. That, that has been discussed, um, and I think we can discuss that more with, with the Appropriations Chairman, and we can make sure that we have what's in there that needs to protect Georgians, 'cause that's what we're concerned about, protecting all Georgians.

364. 1:03:08

     Physical note.

365. 1:03:09

     That'd be the 27.

366. 1:03:10

     That'd be up under the 27 budget. So we have a motion, we have a second.

367. 1:03:14

     I would entertain any more discussion, Mr. Chairman.

368. 1:03:18

     What, what is that? L- s- what number are you?

369. 1:03:19

     I am 15. Thank you. Thank you.

370. 1:03:22

     Glad you could join us.

371. 1:03:23

     Yeah. Glad to. I, I tell you, the scheduling is such that, uh, there's three other meetings, committee meetings going on.

372. 1:03:28

     You can't be in three places at once.

373. 1:03:30

     You, just two. Just two. Three stretches-

374. 1:03:34

     Go ahead, Mr. Mitchell

375. 1:03:35

     ... the, the, the event. Mr. Chair, um, from, from a practical standpoint, let me just hear how you will square, you're simply moving, um, some, uh, uh, officials to another department that will have their oversight. For instance, an, an example I've been given is maybe, like, moving, uh, carpenters under the, the-

376. 1:03:58

     We're, we're talking about securities and commodities.

377. 1:04:00

     Right.

378. 1:04:00

     I saw 21 other states are doing it just like this, and I believe, I have confidence in our chair of Department of Banking that they have the skills, that they can undertake this, and that we will be in good shape and good order.

379. 1:04:13

     Mm-hmm.

380. 1:04:13

     And much less, we will have the legislature helping, and we can look, we can look over.

381. 1:04:18

     Mm-hmm.

382. 1:04:18

     And if there's anything we need to add to it this time next year, we certainly can.

383. 1:04:22

     I see. All right. Well, help me then... That's, that's good. And help me, convince me that the mere fact of making them not report to an elected official would be the best way to go. If that'd be the case, man, there's so many departments I can tell you we would-

384. 1:04:36

     Well, we can take those up later, but they have nothing to do with banking and finance.

385. 1:04:39

     Right.

386. 1:04:39

     But thank you for your comments.

387. 1:04:40

     All right. Mr. Chairman-

388. 1:04:41

     We have a motion and a second. All in favor say aye. Aye. All opposed. No. Okay. Bill passes. Thank you.

389. 1:05:20

     I was on a roll.

390. 1:05:20

     What's that?

391. 1:05:21

     I was on a roll.