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Bills and Amendments: General Index     Bill History: General Index



Senate File 2336

Partial Bill History

Bill Text

PAG LIN
  1  1                           DIVISION I
  1  2                 MOTOR VEHICLE SERVICE CONTRACTS
  1  3    Section 1.  Section 321I.1, subsection 1, Code 1999, is
  1  4 amended to read as follows:
  1  5    1.  "Commissioner" means the commissioner of insurance as
  1  6 provided in section 505.1 or the deputy administrator
  1  7 appointed under section 502.601.
  1  8    Sec. 2.  Section 321I.1, Code 1999, is amended by adding
  1  9 the following new subsection:
  1 10    NEW SUBSECTION.  6A.  "Record" means information stored or
  1 11 preserved in any medium, including in an electronic or paper
  1 12 format.  A record includes but is not limited to documents,
  1 13 books, publications, accounts, correspondence, memoranda,
  1 14 agreements, computer files, film, microfilm, photographs, and
  1 15 audio or visual tapes.
  1 16    Sec. 3.  Section 321I.2, subsection 2, Code 1999, is
  1 17 amended to read as follows:.
  1 18    2.  The issuer of a reimbursement insurance policy shall
  1 19 not cancel a reimbursement insurance policy unless a written
  1 20 notice has been received by the insurance division
  1 21 commissioner and by each applicable provider, including
  1 22 automobile dealers and third-party administrators, which.  The
  1 23 notice shall fix the date of cancellation at a date no earlier
  1 24 than ten days after receipt of the notice by the insurance
  1 25 division commissioner and by the applicable provider.  The
  1 26 notice may be made in person or by mail and a post office
  1 27 department receipt of certified or registered mailing shall be
  1 28 deemed proof of receipt of the notice.
  1 29    Sec. 4.  Section 321I.3, subsection 2, Code 1999, is
  1 30 amended to read as follows:
  1 31    2.  In addition to any other required filings, a true and
  1 32 correct an accurate copy of the service contract and the
  1 33 provider's reimbursement insurance policy, the consent to
  1 34 service of process on the commissioner, and such other
  1 35 information as the commissioner requires, shall be filed
  2  1 annually with the commissioner no later than the first day of
  2  2 August.  If the first day of August falls on a weekend or a
  2  3 holiday, the date for filing shall be the next business day.
  2  4 In addition to the annual filing, the provider shall promptly
  2  5 file copies of any amended documents if material amendments
  2  6 have been made in the materials on file with the division
  2  7 commissioner.  If an annual filing is made after the first of
  2  8 August and sales have occurred during the period when the
  2  9 provider was in noncompliance with this section, the division
  2 10 commissioner shall assess an additional filing fee that is two
  2 11 times the amount normally required for an annual filing.  A
  2 12 fee shall not be charged for interim filings made to keep the
  2 13 materials filed with the division current and accurate.  The
  2 14 annual filing shall be accompanied by a filing fee determined
  2 15 by the commissioner which shall be sufficient to defray the
  2 16 costs of administering this chapter.
  2 17    Sec. 5.  Section 321I.3, Code 1999, is amended by adding
  2 18 the following new subsection:
  2 19    NEW SUBSECTION.  3.  a.  A motor vehicle service contract
  2 20 provider shall promptly file the following information with
  2 21 the insurance commissioner:
  2 22    (1)  A change in the name or ownership of the provider.
  2 23    (2)  The termination of the provider's business.
  2 24    b.  The provider is not required to submit a fee as part of
  2 25 this filing.
  2 26    Sec. 6.  Section 321I.10, Code 1999, is amended to read as
  2 27 follows:
  2 28    321I.10  MISREPRESENTATIONS OF STATE APPROVAL.
  2 29    It is unlawful for a A motor vehicle service contract
  2 30 provider to shall not represent or imply in any manner that
  2 31 the provider has been sponsored, recommended, or approved or
  2 32 that the provider's abilities or qualifications have in any
  2 33 respect been passed upon by the securities bureau, the
  2 34 insurance division, or the state of Iowa, including the
  2 35 commissioner, the insurance division, or the division's
  3  1 securities bureau.
  3  2    Sec. 7.  Section 321I.11, Code 1999, is amended by adding
  3  3 the following new subsection:
  3  4    NEW SUBSECTION.  5A.  A motor vehicle service contract
  3  5 provider shall not repair a motor vehicle covered by a motor
  3  6 vehicle service contract with any of the following:
  3  7    a.  Used parts, unless the provider receives prior written
  3  8 authorization by the vehicle owner.
  3  9    b.  Rebuilt parts, unless the parts are rebuilt according
  3 10 to national standards recognized by the insurance division.
  3 11    Sec. 8.  Section 321I.12, subsection 1, unnumbered
  3 12 paragraph 1, Code 1999, is amended to read as follows:
  3 13    A motor vehicle service contract provider shall keep
  3 14 accurate accounts, books, and records concerning transactions
  3 15 regulated under this chapter.
  3 16    Sec. 9.  Section 321I.12, subsection 1, paragraph a,
  3 17 unnumbered paragraph 1, Code 1999, is amended to read as
  3 18 follows:
  3 19    A motor vehicle service contract provider's accounts,
  3 20 books, and records shall include all of the following:
  3 21    Sec. 10.  Section 321I.12, subsection 1, paragraphs b and
  3 22 c, Code 1999, are amended to read as follows:
  3 23    b.  A motor vehicle service contract provider shall retain
  3 24 all required accounts, books, and records pertaining to a
  3 25 service contract holder for at least two years after the
  3 26 specified period of coverage has expired.  A provider
  3 27 discontinuing business in this state shall maintain its
  3 28 records until the provider furnishes the commissioner
  3 29 satisfactory proof that the provider has discharged all
  3 30 obligations to contract holders in this state.
  3 31    c.  Motor vehicle service contract providers shall make all
  3 32 accounts, books, and records concerning transactions regulated
  3 33 under the chapter available to the commissioner for the
  3 34 purpose of examination.
  3 35    Sec. 11.  Section 321I.14, subsections 1, 2, and 4, Code
  4  1 1999, are amended to read as follows:
  4  2    1.  The administrator of this chapter commissioner may take
  4  3 actions which are necessary or appropriate for the protection
  4  4 of service contract holders or to administer for the effective
  4  5 administration of this chapter.  The administrator
  4  6 commissioner may make private and public investigations and
  4  7 examinations as the administrator commissioner deems necessary
  4  8 to determine whether any person has violated or is about to
  4  9 violate this chapter or a rule or order adopted or issued
  4 10 pursuant to this chapter.
  4 11    2.  For the purpose of In an investigation or proceeding
  4 12 under this chapter, the administrator commissioner or any
  4 13 officer designated by the administrator commissioner may
  4 14 administer oaths and affirmations, subpoena witnesses and
  4 15 compel their attendance, take evidence, and require the
  4 16 production of books, papers, correspondence, memoranda,
  4 17 agreements, or other documents or records which the
  4 18 administrator commissioner deems relevant or material to an
  4 19 inquiry, all of which may be enforced in accordance with
  4 20 chapter 17A.
  4 21    4.  If an investigation provides reasonable evidence Upon
  4 22 the commissioner's determination that a person violated
  4 23 provider has engaged, is engaging, or is about to engage in
  4 24 any act or practice constituting a violation of this chapter
  4 25 or a rule adopted pursuant to this chapter, the commissioner
  4 26 may issue an a summary order directed at directing the person
  4 27 to cease and desist from engaging in the act or practice
  4 28 resulting in the violation or to take other affirmative action
  4 29 as in the judgment of the commissioner is necessary to comply
  4 30 with the requirements of this chapter.
  4 31    a.  If a hearing is not timely requested, the summary order
  4 32 becomes final by operation of law.  The order shall remain
  4 33 effective from the date of issuance until the date the order
  4 34 becomes final by operation of law or is overturned by a
  4 35 presiding officer or court following a request for hearing.  A
  5  1 person who has been issued a summary order under this
  5  2 subsection may contest the order by filing a request for a
  5  3 contested case proceeding as provided in chapter 17A and in
  5  4 accordance with rules adopted by the commissioner.  However,
  5  5 the person shall have at least thirty days from the date that
  5  6 the order is issued in order to file the request.  Section
  5  7 17A.18A is inapplicable to a summary order issued under this
  5  8 subsection.
  5  9    b.  A person violating a summary order issued under this
  5 10 subsection shall be deemed in contempt of that order.  The
  5 11 commissioner may petition the district court to enforce the
  5 12 order as certified by the commissioner.  The district court
  5 13 shall adjudge the person in contempt of the order if the court
  5 14 finds after hearing that the person is not in compliance with
  5 15 the order.  The court shall assess a civil penalty against the
  5 16 person in an amount not less than three thousand dollars but
  5 17 not greater than ten thousand dollars per violation, and may
  5 18 issue further orders as it deems appropriate.
  5 19    Sec. 12.  Section 321I.15, Code 1999, is amended to read as
  5 20 follows:
  5 21    321I.15  AUDITS.
  5 22    The commissioner may examine or cause to be examined the
  5 23 books, papers, records, memoranda, or documents of a motor
  5 24 vehicle service contract provider for the purpose of verifying
  5 25 compliance with this chapter.  The commissioner may require,
  5 26 by a subpoena, the attendance of the provider, or the
  5 27 provider's representative, and any other witness whom the
  5 28 commissioner deems necessary or expedient, and the production
  5 29 of books, papers, records, memoranda, or documents relating in
  5 30 any manner to compliance with this chapter if a provider or
  5 31 witness fails or refuses to produce the documents for
  5 32 examination when requested by the commissioner.
  5 33    Sec. 13.  Section 321I.16, Code 1999, is amended to read as
  5 34 follows:
  5 35    321I.16  VIOLATIONS – PENALTIES.
  6  1    1.  a.  Except as provided in paragraph "b", all of the
  6  2 following shall apply:
  6  3    (1)  A violation of this chapter or a rule adopted pursuant
  6  4 to this chapter is a violation of section 714.16, subsection
  6  5 2, paragraph "a".  The remedies and penalties provided by
  6  6 section 714.16, including but not limited to injunctive relief
  6  7 and civil penalties, apply to violations of this chapter.
  6  8    (2)  A person who willfully and knowingly violates this
  6  9 chapter or a rule adopted pursuant to this chapter is, upon
  6 10 conviction, guilty of a class "D" felony.
  6 11    b.  A motor vehicle service contract provider who fails to
  6 12 file documents and information with the commissioner as
  6 13 required pursuant to section 321I.3 may be subject to a civil
  6 14 penalty.  The amount of the civil penalty shall not be more
  6 15 than four hundred dollars plus two dollars for each motor
  6 16 vehicle service contract that the person executed prior to
  6 17 satisfying the filing requirement.  However, a person who
  6 18 fails to file information regarding a change in the provider's
  6 19 name or the termination of the provider's business as required
  6 20 pursuant to section 321I.3 is subject to a civil penalty of
  6 21 not more than five hundred dollars.
  6 22    2.  If the commissioner believes that grounds exist for the
  6 23 criminal prosecution of persons subject to this chapter a
  6 24 motor vehicle service contract provider for violations of
  6 25 violating this chapter or any other law of this state, the
  6 26 commissioner may forward to the attorney general or the county
  6 27 attorney the grounds for the belief, including all evidence in
  6 28 the commissioner's possession, in order that the attorney
  6 29 general or the county attorney may proceed with the matter as
  6 30 for action deemed appropriate by the attorney general or
  6 31 county attorney.  At the request of the attorney general, the
  6 32 county attorney shall appear and prosecute the action when
  6 33 brought in the county served by the county attorney.
  6 34    3.  A person who willfully and knowingly violates this
  6 35 chapter or a rule adopted pursuant to this chapter is, upon
  7  1 conviction, guilty of a class "D" felony.
  7  2    Sec. 14.  Section 321I.9, Code 1999, is repealed.
  7  3    Sec. 15.  DIRECTIONS TO THE CODE EDITOR.  The Code editor
  7  4 is directed to transfer chapter 321I to or near chapter 523J,
  7  5 and correct internal references as necessary.  
  7  6                           DIVISION II
  7  7                   IOWA UNIFORM SECURITIES ACT
  7  8    Sec. 16.  Section 502.304, subsection 1, unnumbered
  7  9 paragraph 1, Code Supplement 1999, is amended to read as
  7 10 follows:
  7 11    The administrator may by order deny, suspend, or revoke a
  7 12 registration or may censure, impose a civil penalty upon, or
  7 13 bar an applicant, registrant, branch manager, assistant branch
  7 14 manager, supervisor, or any officer, director, partner, or
  7 15 person occupying a similar status or performing similar
  7 16 functions for a registrant.  A person barred under this
  7 17 subsection may be prohibited by the administrator from
  7 18 employment with a registered broker-dealer or investment
  7 19 adviser.  The administrator may restrict the person barred
  7 20 from engaging in any activity for which registration is
  7 21 required.  Any action by the administrator under this
  7 22 subsection may be taken if the order is found to be in the
  7 23 public interest and it is found that the applicant or
  7 24 registrant or, in the case of a broker-dealer or investment
  7 25 adviser, a partner, an officer, or a director, a person
  7 26 occupying a similar status or performing similar functions, or
  7 27 a person directly or indirectly controlling the broker-dealer
  7 28 or investment adviser, or a branch manager, assistant branch
  7 29 manager, or supervisor:
  7 30    Sec. 17.  Section 502.604, subsection 1, Code Supplement
  7 31 1999, is amended to read as follows:
  7 32    1.  Issue an a summary order directed at the person
  7 33 requiring the person to cease and desist from engaging in such
  7 34 act or practice or to take other affirmative action as in the
  7 35 judgment of the administrator is necessary to comply with the
  8  1 requirements of this chapter.
  8  2    a.  If a hearing is not timely requested, the summary order
  8  3 becomes final by operation of law.  The order shall remain
  8  4 effective from the date of issuance until the date the order
  8  5 becomes final by operation of law or is overturned by a
  8  6 presiding officer or court following a request for hearing.  A
  8  7 person who has been issued a summary order under this
  8  8 subsection may contest the order by filing a request for a
  8  9 contested case proceeding as provided in chapter 17A and in
  8 10 accordance with rules adopted by the administrator.  However,
  8 11 the person shall have at least thirty days from the date that
  8 12 the order is issued in order to file the request.  Section
  8 13 17A.18A is inapplicable to a summary order issued under this
  8 14 subsection.
  8 15    b.  A person violating a summary order issued under this
  8 16 subsection shall be deemed in contempt of that order.  The
  8 17 administrator may petition the district court to enforce the
  8 18 order as certified by the administrator.  The district court
  8 19 shall adjudge the person in contempt of the order, if the
  8 20 court finds after hearing that the person is not in compliance
  8 21 with the order.  The court shall assess a civil penalty
  8 22 against the person in an amount not less than three thousand
  8 23 dollars but not greater than ten thousand dollars per
  8 24 violation, and may issue further orders as it deems
  8 25 appropriate.
  8 26    Sec. 18.  Section 502.605, subsection 1, Code 1999, is
  8 27 amended to read as follows:
  8 28    1.  a.  Any Except as provided in paragraph "b", a person
  8 29 who willfully and knowingly violates any provision of this
  8 30 chapter, or any rule or order under this chapter, shall be is
  8 31 guilty of a class "D" felony.
  8 32    b.  A person who willfully and knowingly violates section
  8 33 502.401, 502.402, or 502.403, or section 502.408, subsection 1
  8 34 or 2, resulting in a loss of more than ten thousand dollars is
  8 35 guilty of a class "C" felony.
  9  1    Sec. 19.  Section 502.609, subsection 1, unnumbered
  9  2 paragraph 1, Code 1999, is amended to read as follows:
  9  3    Every applicant for registration under this chapter, and
  9  4 every issuer which proposes to offer a security in this state,
  9  5 unless exempt under section 502.202 or 502.203 and the
  9  6 administrator by rule or order waives the filing, shall file
  9  7 with the administrator, in such form as the administrator by
  9  8 rule prescribes, an irrevocable consent appointing the
  9  9 administrator or the administrator's successor in office to be
  9 10 such person's attorney to receive service of any lawful
  9 11 process in any noncriminal suit, action or proceeding against
  9 12 such person or the successor, executor or administrator of
  9 13 such person which arises under this chapter or any rule or
  9 14 order hereunder after the consent has been filed, with the
  9 15 same validity as if served personally on the person filing the
  9 16 consent.  The consent need not be filed by a person who has
  9 17 filed a consent in connection with a previous registration or
  9 18 notice filing which is then in effect.  Service may be made by
  9 19 leaving a copy of the process in the office of the
  9 20 administrator, but it is not effective unless the plaintiff,
  9 21 including the administrator when acting as such, does the
  9 22 following:  
  9 23                          DIVISION III
  9 24                 BUSINESS OPPORTUNITY PROMOTIONS
  9 25    Sec. 20.  Section 523B.1, Code Supplement 1999, is amended
  9 26 by adding the following new subsection:
  9 27    NEW SUBSECTION.  10A.  "Record" means the same as defined
  9 28 in section 321I.1.
  9 29    Sec. 21.  Section 523B.2, subsection 2, paragraph b,
  9 30 subparagraph (2), Code Supplement 1999, is amended to read as
  9 31 follows:
  9 32    (2)  A disclosure document prepared pursuant to the federal
  9 33 trade commission rule entitled "Disclosure relating to
  9 34 disclosure requirements and prohibitions concerning
  9 35 franchising and business opportunity ventures", as adopted by
 10  1 rule of the administrator in accordance with 16 C.F.R. } 436
 10  2 (1979).  The administrator may by rule adopt any amendment to
 10  3 the disclosure document prepared pursuant to 16 C.F.R. } 436
 10  4 (1979) that has been adopted by the federal trade commission.
 10  5    Sec. 22.  Section 523B.2, subsection 2, Code Supplement
 10  6 1999, is amended by adding the following new paragraph:
 10  7    NEW PARAGRAPH.  c.  The seller shall disclose to the
 10  8 administrator in the disclosure document or otherwise any
 10  9 sales or offers made in this state prior to registration.
 10 10    Sec. 23.  Section 523B.2, subsection 4, Code Supplement
 10 11 1999, is amended to read as follows:
 10 12    4.  EFFECTIVE DATE.  A registration automatically becomes
 10 13 effective upon the expiration of the fifteenth thirtieth full
 10 14 business day after the complete filing is received by the
 10 15 administrator, provided that no an order has not been issued
 10 16 or a proceeding is not pending under subsection 10.  The
 10 17 administrator may by order waive or reduce the time period
 10 18 prior to effectiveness, provided that a complete filing has
 10 19 been made.  The administrator may by order defer the effective
 10 20 date until the expiration of the fifteenth thirtieth full
 10 21 business day after the filing of an amendment with the
 10 22 administrator.
 10 23    Sec. 24.  Section 523B.2, subsection 9, paragraph c, Code
 10 24 Supplement 1999, is amended by adding the following new
 10 25 subparagraph:
 10 26    NEW SUBPARAGRAPH.  (8)  The rights and responsibilities of
 10 27 the parties regarding the marketing of a business opportunity,
 10 28 including but not limited to all of the following:
 10 29    (a)  Whether the seller assigns the purchaser a territory
 10 30 in which to sell a business opportunity.
 10 31    (b)  Whether the seller assists the purchaser in finding
 10 32 locations in which to sell a business opportunity.
 10 33    (c)  Whether the purchaser is solely responsible for
 10 34 marketing a business opportunity.
 10 35    Sec. 25.  Section 523B.8, subsection 1, Code 1999, is
 11  1 amended to read as follows:
 11  2    1.  a.  If it appears to the administrator Upon the
 11  3 administrator's determination that a person has engaged, is
 11  4 engaging, or is about to engage in any act or practice
 11  5 constituting a violation of this chapter or a rule or order
 11  6 adopted or issued under this chapter, the administrator may
 11  7 issue an a summary order directed at directing the person
 11  8 requiring the person to cease and desist from engaging in the
 11  9 act or practice or to take other affirmative action as in the
 11 10 judgment of the administrator is necessary to comply with the
 11 11 requirements of this chapter.
 11 12    b.  The If a hearing is not timely requested, the summary
 11 13 order becomes final by operation of law.  The order shall
 11 14 remain effective from the date of issuance until the date the
 11 15 order becomes final by operation of law or is overturned by a
 11 16 presiding officer or court following a request for hearing.  A
 11 17 person named in the order may, within fourteen days of the
 11 18 date of the order, file a written who has been issued a
 11 19 summary order under this subsection may contest it by filing a
 11 20 request for a hearing.  The hearing shall be held in
 11 21 accordance with contested case proceeding as provided in
 11 22 chapter 17A and in accordance with the rules adopted by the
 11 23 administrator.  However, the person shall have at least thirty
 11 24 days from the date that the order is issued in order to file
 11 25 the request.  Section 17A.18A is inapplicable to a summary
 11 26 order issued under this subsection.
 11 27    c.  A person violating a summary order issued under this
 11 28 subsection shall be deemed in contempt of that order.  The
 11 29 administrator may petition the district court to enforce the
 11 30 order as certified by the administrator.  The district court
 11 31 shall adjudge the person in contempt of the order if the court
 11 32 finds after hearing that the person is not in compliance with
 11 33 the order.  The court shall assess a civil penalty against the
 11 34 person in an amount not less than three thousand dollars but
 11 35 not greater than ten thousand dollars per violation, and may
 12  1 issue further orders as it deems appropriate.
 12  2    Any A consent agreement between the administrator and the
 12  3 seller may be filed in the miscellaneous docket of the clerk
 12  4 of the district court.
 12  5    Sec. 26.  Section 523B.8, subsection 2, paragraph b, Code
 12  6 1999, is amended to read as follows:
 12  7    b.  For the purpose of an investigation or proceeding under
 12  8 this chapter, the administrator or an officer designated by
 12  9 the administrator may administer oaths and affirmations,
 12 10 subpoena witnesses, compel the attendance of witnesses, take
 12 11 evidence and require the production of books, papers,
 12 12 correspondence, memoranda, agreements, or other documents or
 12 13 records which the administrator deems relevant or material to
 12 14 the inquiry.  
 12 15                           DIVISION IV
 12 16                  RESIDENTIAL SERVICE CONTRACTS
 12 17    Sec. 27.  Section 22.7, Code Supplement 1999, is amended by
 12 18 adding the following new subsection:
 12 19    NEW SUBSECTION.  39.  Information obtained by the
 12 20 commissioner of insurance in the course of an investigation as
 12 21 provided in section 502.603, 523B.8, or 523C.23.
 12 22    Sec. 28.  Section 523C.1, Code 1999, is amended by adding
 12 23 the following new subsection:
 12 24    NEW SUBSECTION.  6A.  "Record" means the same as defined in
 12 25 section 321I.1.
 12 26    Sec. 29.  Section 523C.7, subsection 4, Code 1999, is
 12 27 amended to read as follows:
 12 28    4.  To the extent necessary to administer the provisions of
 12 29 this chapter, the commissioner may, after notice and hearing,
 12 30 institute a residential service contract form approval or form
 12 31 review fee as the commissioner shall by.  If the commissioner
 12 32 establishes a fee, the amount of the fee shall be set by rule
 12 33 set adopted pursuant to chapter 17A.  The fee, if imposed, may
 12 34 be by dollar amount or based upon a percentage of the sale
 12 35 value of the contract.  However, the fee shall not exceed
 13  1 fifty thousand dollars.
 13  2    Sec. 30.  Section 523C.19, Code 1999, is amended to read as
 13  3 follows:
 13  4    523C.19  CEASE AND DESIST ORDERS.
 13  5    1.  If an investigation provides reasonable evidence Upon
 13  6 the commissioner's determination that a person violated any
 13  7 provision has engaged, is engaging, or is about to engage in
 13  8 any act or practice constituting a violation of this chapter
 13  9 or any rule adopted pursuant to this chapter, the commissioner
 13 10 may issue an order directed at directing the person to cease
 13 11 and desist from engaging in the act or practice resulting in
 13 12 the violation or to take other affirmative action as in the
 13 13 judgment of the commissioner is necessary to comply with the
 13 14 requirements of this chapter.
 13 15    2.  If a hearing is not timely requested, the summary order
 13 16 becomes final by operation of law.  The order shall remain
 13 17 effective from the date of issuance until the date the order
 13 18 becomes final by operation of law or is overturned by a
 13 19 presiding officer or court following a request for hearing.  A
 13 20 person who has been issued a summary order under this section
 13 21 may contest it by filing a request for a contested case
 13 22 proceeding as provided in chapter 17A and in accordance with
 13 23 rules adopted by the commissioner.  However, the person shall
 13 24 have at least thirty days from the date that the order is
 13 25 issued in order to file the request.  Section 17A.18A is
 13 26 inapplicable to a summary order issued under this subsection.
 13 27    3.  A person violating a summary order issued under this
 13 28 subsection shall be deemed in contempt of that order.  The
 13 29 commissioner may petition the district court to enforce the
 13 30 order as certified by the commissioner.  The district court
 13 31 shall adjudge the person in contempt of the order if the court
 13 32 finds after hearing that the person is not in compliance with
 13 33 the order.  The court shall assess a civil penalty against the
 13 34 person in an amount not less than three thousand dollars but
 13 35 not greater than ten thousand dollars per violation, and may
 14  1 issue further orders as it deems appropriate.
 14  2    Sec. 31.  NEW SECTION.  523C.23  INVESTIGATIONS AND
 14  3 SUBPOENAS.
 14  4    1.  a.  In enforcing this chapter, the commissioner may
 14  5 conduct a public or private investigation in order to do any
 14  6 of the following:
 14  7    (1)  Determine whether a person has violated or is about to
 14  8 violate a provision of this chapter or a rule or order under
 14  9 this chapter.
 14 10    (2)  Aid in the enforcement of this chapter or in the
 14 11 prescribing of rules and forms under this chapter.
 14 12    b.  In carrying out this subsection, the commissioner may
 14 13 do all of the following:
 14 14    (1)  Conduct the investigation within or outside of this
 14 15 state.
 14 16    (2)  Require or allow a person to file a statement in
 14 17 writing regarding the facts or circumstances concerning a
 14 18 matter to be investigated.  The commissioner may require that
 14 19 the statement be made under oath.
 14 20    (3)  Apply to the district court for the issuance of an
 14 21 order requiring a person's appearance before the commissioner
 14 22 or the attorney general.  The person may also be required to
 14 23 produce documentary evidence germane to the subject of the
 14 24 investigation.  The failure to obey an order under this
 14 25 subsection constitutes contempt of court.
 14 26    c.  Information obtained in the course of an investigation
 14 27 is confidential as provided in section 22.7.  However, upon a
 14 28 determination that disclosure of the information is necessary
 14 29 or appropriate in the public interest or for the protection of
 14 30 consumers, the commissioner may do any of the following:
 14 31    (1)  Share information obtained during the course of the
 14 32 investigation with another regulatory authority or government
 14 33 agency.
 14 34    (2)  Publish information obtained during the course of the
 14 35 investigation which concerns a violation of this chapter or a
 15  1 rule or order under this chapter.
 15  2    2.  Except as provided in section 523C.19, a proceeding
 15  3 instituted under this chapter shall be conducted pursuant to
 15  4 chapter 17A and rules adopted by the commissioner pursuant to
 15  5 chapter 17A.
 15  6    3.  In an investigation or proceeding conducted under this
 15  7 chapter, the commissioner or any designee of the commissioner
 15  8 may administer oaths and affirmations, subpoena witnesses,
 15  9 compel their attendance, take evidence, and require the
 15 10 production of any records which the commissioner deems
 15 11 relevant or material to the inquiry.
 15 12    4.  A person is not excused from attending and testifying
 15 13 or from producing a document or record before the commissioner
 15 14 or in obedience to a subpoena of the commissioner or an
 15 15 officer designated by the commissioner, or in a proceeding
 15 16 instituted by the commissioner, on the grounds that the
 15 17 testimony or evidence, documentary or otherwise, required of
 15 18 the person may tend to incriminate or subject the person to a
 15 19 penalty or forfeiture.  However, a person shall not be
 15 20 prosecuted or subjected to any penalty or forfeiture due to a
 15 21 transaction or matter about which the person is compelled,
 15 22 after claiming privilege against self-incrimination, to
 15 23 testify or produce evidence, documentary or otherwise.  The
 15 24 person testifying, however, is not exempt from prosecution and
 15 25 punishment for perjury or contempt committed while testifying.  
 15 26                           DIVISION V
 15 27                    RETIREMENT CARE CONTRACTS
 15 28    Sec. 32.  Section 523D.13, Code 1999, is amended to read as
 15 29 follows:
 15 30    523D.13  COMPLIANCE ORDERS.
 15 31    1.  Upon the commissioner's determination that a provider
 15 32 has violated a provision has engaged, is engaging, or is about
 15 33 to engage in any act or practice constituting a violation of
 15 34 this chapter or a rule adopted pursuant to this chapter, the
 15 35 commissioner may issue an a summary order requiring a
 16  1 directing the provider to cease and desist from an unlawful
 16  2 engaging in the act or practice resulting in the violation or
 16  3 to take other affirmative action as in the judgment of the
 16  4 commissioner is necessary to comply with the requirements of
 16  5 this chapter.
 16  6    2.  The person named in the order may, within fourteen days
 16  7 after receipt of the order, file a written request for a
 16  8 hearing.  The hearing shall be held in accordance with chapter
 16  9 17A.  If a hearing is not requested, the order shall become
 16 10 permanent.  If a hearing is not timely requested, the summary
 16 11 order becomes final by operation of law.  The order shall
 16 12 remain effective from the date of issuance until the date the
 16 13 order becomes final by operation of law or is overturned by a
 16 14 presiding officer or court following a request for hearing.  A
 16 15 person who has been issued a summary order under this section
 16 16 may contest it by filing a request for a contested case
 16 17 proceeding as provided in chapter 17A and in accordance with
 16 18 rules adopted by the commissioner.  However, the person shall
 16 19 have at least thirty days from the date that the order is
 16 20 issued in order to file the request.  Section 17A.18A is
 16 21 inapplicable to a summary order issued under this section.
 16 22    3.  A person violating a summary order issued under this
 16 23 section shall be deemed in contempt of that order.  The
 16 24 commissioner may petition the district court to enforce the
 16 25 order as certified by the commissioner.  The district court
 16 26 shall adjudge the person in contempt of the order if the court
 16 27 finds after hearing that the person is not in compliance with
 16 28 the order.  The court shall assess a civil penalty against the
 16 29 person in an amount not less than three thousand dollars but
 16 30 not greater than ten thousand dollars per violation, and may
 16 31 issue further orders as it deems appropriate.  
 16 32                           DIVISION VI
 16 33                    PROBATE TRANSFER ON DEATH
 16 34    Sec. 33.  Section 633.801, subsection 6, Code 1999, is
 16 35 amended to read as follows:
 17  1    6.  "Security" means a security as defined in section
 17  2 502.102.  For purposes of this chapter, "security" includes,
 17  3 but is not limited to, a certificated security, an
 17  4 uncertificated security, and a security account.  
 17  5                           EXPLANATION
 17  6    This bill amends a number of provisions relating to the
 17  7 entities and subject matter under the regulatory authority of
 17  8 the insurance division of the department of commerce,
 17  9 including motor vehicle service contracts under Code chapter
 17 10 321I, securities (the Iowa "Blue Sky Law") under Code chapter
 17 11 502, business opportunities and promotions under Code chapter
 17 12 523B, residential service contracts under Code chapter 523C,
 17 13 retirement facilities under Code chapter 523D, and securities
 17 14 transfer on death probate provisions under Code chapter 633.
 17 15 A number of provisions contain similar language.  
 17 16                           DIVISION I
 17 17                 MOTOR VEHICLE SERVICE CONTRACTS
 17 18    The bill amends provisions in Code section 321I.1, which
 17 19 provides for the chapter's definitions.  It amends the
 17 20 definition of "commissioner" to include the commissioner's
 17 21 deputy for purposes of administering the Code chapter.  The
 17 22 bill repeals Code section 321I.9, which provided
 17 23 administrative authority to the deputy.  The bill replaces
 17 24 references in the chapter to "insurance division" to
 17 25 "commissioner" for purposes of consistency.  The bill adds a
 17 26 definition of "record" to mean information stored or preserved
 17 27 in any medium.  Provisions throughout the chapter refer to the
 17 28 commissioner's authority to examine records and documents.
 17 29 The references appear inconsistent, either mentioning records
 17 30 as some separate item (see Code section 321I.12 referring to
 17 31 "accounts, books, and records") or referring to records
 17 32 without any other reference (see the second occurrence in Code
 17 33 section 321I.12(1)(b)).  The bill replaces these references
 17 34 with the term "records" as defined in the bill.
 17 35    The bill amends Code section 321I.3 to provide that a motor
 18  1 vehicle service contract provider must file certain provider
 18  2 information with the commissioner.  The bill provides that a
 18  3 fee is not required as part of the filing.
 18  4    The bill amends Code section 321I.11 to provide that a
 18  5 provider cannot repair a motor vehicle covered by a contract
 18  6 with used parts, unless the vehicle owner is notified prior to
 18  7 the repair.  The bill also provides that any rebuilt parts
 18  8 used in repair of vehicles covered by service contracts be
 18  9 rebuilt by a manufacturer according to nationally recognized
 18 10 standards.
 18 11    The bill amends Code section 321I.14, which provides for
 18 12 investigations and administrative actions taken by the
 18 13 commissioner against providers.  The bill sets out procedural
 18 14 requirements by persons who contest an order issued by the
 18 15 commissioner.  The bill provides for the assessment of civil
 18 16 penalties for violations of an order issued pursuant to the
 18 17 section.
 18 18    The bill amends Code section 321I.16, which provides for
 18 19 penalties.  The bill restructures the provision in order to
 18 20 enhance readability.  For example, it moves a provision which
 18 21 provides that a violation of the chapter is a class "D"
 18 22 felony.  It also provides that a provider who fails to file
 18 23 documents as required in the bill is subject to a civil
 18 24 penalty equal to $400 plus $2 for each contract that the
 18 25 provider executes prior to satisfying the filing requirement.
 18 26    The bill directs the Iowa Code editor to transfer the Code
 18 27 chapter to a place closer to other chapters under the
 18 28 jurisdiction of the insurance division.  
 18 29                           DIVISION II
 18 30                   IOWA UNIFORM SECURITIES ACT
 18 31    The bill amends provisions in Iowa's "Blue Sky Law"
 18 32 administered by the commissioner of insurance or the
 18 33 commissioner's deputy (referred to as the "administrator").
 18 34    The bill provides that the commissioner may deny, suspend,
 18 35 or revoke a registration or discipline a branch manager,
 19  1 assistant branch manager, or supervisor in the same manner
 19  2 that the commissioner may take action against an applicant or
 19  3 registrant.
 19  4    The bill also amends Code section 502.604, which authorizes
 19  5 the commissioner to investigate and take disciplinary action
 19  6 against persons regulated under the chapter.  The bill makes
 19  7 the same changes as it did in Code section 321I.14 regulating
 19  8 motor vehicle service contracts.  The bill provides procedural
 19  9 requirements by persons who contest an order issued by the
 19 10 administrator.  The bill provides for the assessment of civil
 19 11 penalties for violations of an order issued pursuant to the
 19 12 section.
 19 13    Code section 502.605 provides that a person violating the
 19 14 chapter is guilty of a class "D" felony.  This bill provides
 19 15 that a person committing fraudulent conduct involving investor
 19 16 losses in excess of $10,000 is guilty of a class "C" felony,
 19 17 which is similar to the criminal penalty for theft pursuant to
 19 18 Code section 714.2 and fraudulent practice in the first degree
 19 19 pursuant to Code section 714.9.
 19 20    The bill amends Code section 502.609, which requires that
 19 21 an issuer must file an irrevocable consent appointing the
 19 22 commissioner as the issuer's attorney to receive service in
 19 23 civil actions.  The bill exempts certain persons from this
 19 24 requirement if the exemption is validated by rule or order of
 19 25 the administrator, including persons who issue exempt
 19 26 securities.  
 19 27                          DIVISION III
 19 28                 BUSINESS OPPORTUNITY PROMOTIONS
 19 29    The bill amends Code chapter 523B which regulates sellers
 19 30 of business opportunity promotions by the commissioner or
 19 31 deputy (referred to as the "administrator" under the chapter).
 19 32 A business opportunity is the offer for the sale of products
 19 33 and equipment.
 19 34    The bill amends Code section 523B.1, which provides
 19 35 definitions for the chapter.  Specifically, the bill defines
 20  1 the term "record" in the same way in which the bill defines
 20  2 the term under Code section 321I.1 regulating motor vehicle
 20  3 service contracts.  Similarly, the bill strikes references to
 20  4 "books, papers, correspondence, memoranda, agreements, or
 20  5 other documents or records" in the chapter.
 20  6    The bill amends Code section 523B.2, which provides for the
 20  7 disclosure of documents prepared pursuant to federal
 20  8 regulations.  The bill eliminates language which refers to a
 20  9 specific date that the regulation was adopted and states that
 20 10 the commissioner must adopt rules providing for enforcement
 20 11 under the most recent federal regulation.
 20 12    The bill further amends Code section 523B.2, which provides
 20 13 registration requirements.  The Code section requires
 20 14 disclosure of documents to the commissioner as part of a
 20 15 registration process.  The bill provides that a seller must
 20 16 disclose sales or offers made in this state prior to
 20 17 registration.  The Code section provides that a registration
 20 18 automatically becomes effective upon the expiration of the
 20 19 fifteenth business day after the filing has been received by
 20 20 the commissioner.  The bill increases that period to the
 20 21 thirtieth business day.  The Code section provides that a
 20 22 contract offered under the section must include a number of
 20 23 items.  The bill adds to those required items, by stating that
 20 24 it must include the rights and responsibilities of the parties
 20 25 regarding the marketing of a business opportunity.
 20 26    The bill amends Code section 523B.8, which provides for
 20 27 investigating or taking disciplinary action against persons
 20 28 regulated under the chapter.  The bill makes the same changes
 20 29 as it did in Code section 321I.14 regulating motor vehicle
 20 30 service contracts and Code section 502.604 regulating
 20 31 securities.  The bill provides procedural requirements by
 20 32 persons who contest an order issued by the administrator.  The
 20 33 bill provides for the assessment of civil penalties for
 20 34 violations of an order issued pursuant to the section.  
 20 35                           DIVISION IV
 21  1                  RESIDENTIAL SERVICE CONTRACTS
 21  2    The bill amends provisions in Code chapter 523C, which
 21  3 regulates residential service contracts executed between a
 21  4 residential owner and a company for the repair, maintenance,
 21  5 or replacement of parts of the residence.
 21  6    The bill amends Code section 523C.1, which provides
 21  7 definitions for the chapter.  Specifically, it defines the
 21  8 term "record" in the same way in which the bill defines the
 21  9 term under Code section 321I.1 regulating motor vehicle
 21 10 service contracts and Code section 523B.1 regulating business
 21 11 opportunity promotions.
 21 12    The bill amends Code section 523C.7, which provides that
 21 13 the administrator may institute a residential service contract
 21 14 form approval or form review fee.  The bill provides that the
 21 15 fee cannot exceed $50,000.
 21 16    The bill amends Code section 523C.19, which provides for
 21 17 investigating or taking disciplinary action against persons
 21 18 regulated under the chapter.  The bill makes the same changes
 21 19 as it did in Code section 321I.14 regulating motor vehicle
 21 20 service contracts, Code section 502.604 regulating securities,
 21 21 and Code section 523B.8 regulating business opportunity
 21 22 promotions.  The bill provides procedural requirements by
 21 23 persons who contest an order issued by the commissioner.  The
 21 24 bill provides for the assessment of civil penalties for
 21 25 violations of an order issued pursuant to the section.
 21 26    The bill creates a new provision, designated as Code
 21 27 section 523C.23, which provides for investigations and
 21 28 subpoenas.  It authorizes the commissioner to conduct public
 21 29 or private investigations and issue subpoenas.  The section is
 21 30 based on similar provisions in Code section 502.603.
 21 31 Information obtained in the course of the investigation is
 21 32 confidential.  
 21 33                           DIVISION V
 21 34                    RETIREMENT CARE CONTRACTS
 21 35    The bill amends Code chapter 523D, which provides for the
 22  1 regulation of contracts to provide care to persons in a
 22  2 retirement facility.
 22  3    The bill amends Code section 523D.13, which provides for
 22  4 investigating or taking disciplinary action against persons
 22  5 regulated under the chapter.  The bill makes the same changes
 22  6 as it did in Code section 321I.14 regulating motor vehicle
 22  7 service contracts, Code section 502.604 regulating securities,
 22  8 and Code section 523B.8 regulating business opportunity
 22  9 promotions.  The bill provides procedural requirements by
 22 10 persons who contest an order issued by the commissioner.  The
 22 11 bill provides for the assessment of civil penalties for
 22 12 violations of an order issued pursuant to the section.  
 22 13                           DIVISION VI
 22 14                    PROBATE TRANSFER ON DEATH
 22 15    This bill amends Code chapter 633, which is the "Iowa
 22 16 Probate Code".  Specifically it amends provisions enacted by
 22 17 the general assembly in 1997 referred to as the "Uniform
 22 18 Transfer on Death Security Registration Act".  The bill amends
 22 19 the term "security" to include a certificated security, an
 22 20 uncertificated security, and a security account.  
 22 21 LSB 5341SV 78
 22 22 da/cf/24.1
     

Text: SF02335                           Text: SF02337
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