Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 1878 entitled:

begs leave to report as follows:

The purpose of this measure is to conform Hawaii's law on investment security adviser compensation to federal securities law.

Testimony in support of this measure was submitted by the Business Registration Division of the Department of Commerce and Consumer Affairs. No testimony in opposition was received by your Committee.

Your Committee finds that conforming State securities law to federal securities law will facilitate the industry's ability to conduct business on a nationwide basis while maintaining protections for consumers.

Upon further consideration, your Committee has amended this measure by adopting a technical amendment proposed by the Department of Commerce and Consumer Affairs correcting a reference to the federal Investment Advisors Act of 1940. Your Committee has also adopted a technical, nonsubstantive amendment for clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1878, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1878, S.D. 1, and be placed on the calendar for Third Reading.