The Arkansas Securities Commissioner is appointed by the state’s governor, a hierarchy that spurs some businesses to protest. One such business is the state’s largest broker dealer, Stephens Inc., which has initiated a proposal that enforcement actions levied by the state’s Securities Department should go straight to a judge’s rule, reports Arkansas Business online. Typically, enforcement actions start and end through in-agency administrative hearing processes, with courtrooms used only in appeals. Stephens, Inc. is insisting that a circuit court be the first avenue for resolving alleged civil violations. Texas securities attorneys, some who are licensed in Arkansas simultaneously, wonder what implications such a legislative proposal might have, and whether it’s grounded in anything but distaste for the current Securities Commissioner.
Heath Abshure is the Arkansas State Securities Commissioner, and he wagers that Stephens’ proposal may garner some real attention in its possibility to amend the Arkansas Securities Act. “Do I think this has legs with the Legislature?” Abshure muses, “Absolutely. Anything Stephens proposes has legs over there.” The amendment would be a pretty big deal, Arkansas and neighboring Texas securities attorneys note. Removing the administrative hearing process would “be a marked departure from the codified protocol of securities law on the books of states across the nation [and] take the Arkansas Securities Department process out of step with other state agencies that similarly make the commissioner’s desk the first line of regulation” such as the Insurance Department and State Bank Department, one local lawyer notes.
San Antonio securities attorneys understand that for now, Arkansas’ changes are just beginning to be talked about. No bills have been sponsored and the
current legislative session is limited to budget items. But if the change were to be imposed, the lawyers would be on the front line of its impact.
Still, others wonder whether the proposal from Stephens Inc. is genuinely concerned with justice. Jim Jones is president of an investment firm in Little Rock, and notes that changes to enforcement hearing processes will have to be diligently considered. “We think this is an important discussion,” Jones says. “Do you get a fair hearing? Do you have a chance for a fair appeal? Is it a fair process?” Is Stephens concerned with fairness, too? The recent run-in between Stephens Inc. and the Securities Commissioner after which Stephens was fined $25,000 may indicate a more personal motive.
After being fined, the firm sought out a meeting with Governor Mike Beebe who appointed Abshure to the commissioner position. While the governor’s office was unable to provide comment about the content of the meeting, it’s likely that Stephens Inc. isn’t happy with Abshure’s sanction of its business, and is attempting an unofficial campaign to get Abshure out of office. Stephens has publicly questioned Abshure’s “financial reporting ethics and his ability to dispense impartial rulings given his background as a regulatory activist,” so it’s not hard to connect the dots behind Stephens’ motivation.
Still, Texas securities attorneys like Douglas J. Shumway and lawyers in other neighboring states point out that Arkansas is the only state whose Securities Commissioner is appointed by the governor, and others wonder about potential nepotism that could be involved in filling the post.