Commissioner of Securities Matt Kitzi leads Missouri's investment regulation efforts

Wednesday, August 29, 2012 | 6:00 a.m. CDT; updated 6:42 p.m. CDT, Wednesday, August 29, 2012

COLUMBIA — Missouri Commissioner of Securities Matt Kitzi decided early on that if his job would keep him from his wife and kids, it would have to be worthwhile work.

Since December 2005, the Boone County native has led the Missouri Securities Division, which regulates investments in the state. Over that period, the division has spared Missouri investors about $2.3 billion in restitution and repurchases.

While Kitzi said Missouri has the second-largest concentration of retail brokerage headquarters, behind only New York City, the investors he works to protect include firefighters, schoolteachers and small-business owners.

"I worry that general middle-class families don’t think of themselves as investors," Kitzi, 37, said. "Instead, they might envision investors as suit-and-tie captains of industry. But everyday citizens are impacted by these very real issues."

In August, Kitzi was elected to the North American Securities Administrators Association, a volunteer resource and advisory organization for state regulators. The oldest international organization for investor protection, it provides training and information for state regulators while raising their profiles in the public eye.

From Englewood to law school

Kitzi grew up in Englewood, near Columbia Regional Airport, in a "ramshackle little hut." Back then, he said, going to Columbia was "like going into town." He keeps a picture of the house in his office to remind him where he came from. His county roots prompted him to name his son Boone.

Kitzi got his first job at age 11, busing tables in the upstairs Pyramid Room at Ernie’s Cafe and Steakhouse. His family eventually moved to the Lake of the Ozarks area, where he attended high school at Osage High School. He was quarterback of the football team, played basketball, ran track and served as student body president. He was editor of both the school newspaper and its yearbook.

He did all that while working part-time jobs. Despite his achievements, Kitzi remains humble.

"My high school had a total of 400 students, so it gave me a lot of chances, and the job market in the lake area was full of opportunities," Kitzi said. "I was lucky, but that period had a huge impact on my work ethic, sense of leadership and idea of who I wanted to be."

In his undergraduate years at Northwest Missouri State University, Kitzi met his wife, Laura, a Nebraska native and former Cornhuskers fan who is now a fully converted Missouri fan. After earning a degree in international business, he attended the University of Missouri-Kansas City School of Law.

"When I graduated, it was the height of the dot-com bubble, and I was fortunate that jobs were available," Kitzi said. "Most of the legal talent was heading to the coasts – East and West."

At a time when most lawyers worked on the coasts, Kitzi worked in Missouri.

"I was happy with the opportunities I had, and I appreciated the real sense of community in KC," Kitzi said. "Though I lived in Kansas City, I’ve always been a Tigers fan through and through.

"If I can avoid the state of Kansas, I will.”

From associate to commissioner

Kitzi first worked as an associate for Armstrong Teasdale, where he represented large clients and government entities and helped start new companies. That's where he met mentor Joseph Bednar, former chief legal counsel for Gov. Mel Carnahan. Bednar referred Kitzi to Secretary of State Robin Carnahan to interview for state director of corporations.

Bednar said he referred Kitzi to Carnahan because of his experience and character. For him, Kitzi’s decision to take the job represented a sacrifice.

"He could’ve been a partner at a major firm by then. Law school creates major debt in loans, and most lawyers can’t afford to accept public service salaries," Bednar said. "I knew when I appointed him that he has a sense of justice and would execute well."

Kitzi, who took a 40 percent pay cut to leave his former job, said he wanted work that was important and had impact.

"It was a tough decision, and I owe a lot to my wife, who was supportive of my choice," Kitzi said.

In 2005, when former Commissioner of Securities David Cosgrove resigned, Carnahan asked Kitzi to step in, and at age 31, he became the youngest state commissioner of securities in the country at the time. 

"The securities job is definitely a challenge and deals with very complex issues," Kitzi said. "There are major issues at play, but I appreciate the opportunity to have an impact on people's lives."

The state securities agency licenses and registers more than 130,000 stockbrokers and investment advisers, making sure they’re fit to do business with Missourians.

From crime to punishment

But it’s enforcement, such as the June 2011 disclosure of a $2 million energy scam in mid-Missouri, that gets the most publicity, Kitzi said. David Grammer of Macon misused money from people who thought they were investing in molecular exchange energy technology and instead used the cash to buy personal items, such as vehicles, and to subscribe to adult entertainment websites.

Grammer, who claimed to have invented a shoebox-size generator that could power a city, was sentenced July 24 to 78 months in prison and ordered to pay restitution of $2.7 million to more than 84 individual and business victims.

While Kitzi has taken action against major corporations such as Goldman Sachs, Wells Fargo and Credit Suisse, he said his job is different from federal securities work that can affect people states away. Kitzi said his division works on the ground with people who are neighbors and whose needs they understand.

"I wish we could get numb to how devastating losses for people are, but we don’t," Kitzi said. "It would be easier to deal with the cases if we could, but when lifetime savings are lost, it’s a real impact. The harm done is personal, and it’s our job to hold the wrongdoer accountable."

Kitzi said the vast majority of investment advisers and stockbrokers are honest, but the 1 percent who aren't can affect thousands of families. Kitzi said victims are most often senior citizens who have lifelong savings for retirement.

"When they lose that money, that’s it," he said. "They don’t have years in the job market to make up for it."

From leadership to teamwork

Kitzi is working to implement provisions of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act at the state level. He said there are challenges to regulating mid-size investment advisers who have infrequently or never been audited or regulated by the Securities and Exchange Commission. Kitzi said he wants it to be a clear transition that allows for business continuity and investor protection without being overly burdensome.

"When I first took the job, I, of course, had no idea of the impending financial crisis, its size and severity," he said. "It’s been a major challenge, and we’re still seeing the fallout."

Kitzi gave credit to his staff, which he said is relatively small considering the thousands of cases his office handles. He said the division's employees work hard and remain dedicated in an industry where most of them could leave for better salaries. Kitzi’s assistant commissioner, Mary Hosmer, has worked in the division for more than 20 years.

"Kitzi is one of the best bosses I’ve ever had," said Hosmer, of Marshfield. She added that Kitzi wasn’t as experienced in regulation at first, but he made an effort to ask questions and learn.

"He’s involved and articulate, giving us a good rapport with the industry and other regulators," she said. "He’s helped create an environment where we can work well with other states and agencies. He’s very involved at making us better at what we do."

From commissioner to father

The Missouri Securities Division generates $15 million to $18 million of general revenue for the state per year from licensing and registration alone, and in 2007, it launched the most investigations in a single year in the state’s history.

After the election, a new secretary of state could appoint a new securities commissioner. Kitzi said that, although his future is uncertain, he's confident his work and the experiences he's had will leave him in a good position no matter what happens.

In addition to Boone, Matt Kitzi and Laura Kitzi are parents to their daughter, Ava, who is 8. Laura Kitzi owns Columbia Jazzercise Fitness Center.

Matt Kitzi said they love Columbia, and he hopes Columbia residents appreciate the work done by him and his agency.

"It’s frustrating when people run down state government employees as freeloaders and lazy workers," Kitzi said. "There are individuals who sacrifice better salaries at more glamorous jobs, working here throughout the night and weekends without overtime, because they care. We think Missourians would appreciate the hard work we do and we keep that in mind."

Supervising editor is Scott Swafford.

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Richard Saunders August 29, 2012 | 6:27 p.m.

So... is Mr. Kitzi willing to help the farmers who were robbed by the "Honorable" Jon Corzine while running MF Global? Or those who were robbed by Russell Wasendorf, Sr at PFG? (at least he was decent enough to try and kill himself once his fraud went public)

Thing is, he'll have to take on the both the SEC and the US Congress who is actively protecting Mr. Corzine and the crimes in progress.

Oh, if you're reading this Mr. Kitzi, Morgan Stanley is about to go under along with the brokerage accounts of over 300,000 people. I'm sure many of them live under your jurisdiction. As evidenced by the two bankruptcies above, "segregated customer accounts" aren't really segregated after all, but instead, were GIVEN to JP Morgan as collateral for loans.

Now I'm sure you know this is blatantly illegal, yet Corzine still walks the street with nary an investigation, let alone a charge against him.

It kind of makes one doubt the integrity of the system, no?

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