"This law could send Utah back to the days when we were considered the penny stock fraud capital of the world," said Chuck Newton, government affairs director for the Financial Planning Association of Utah.

"Because of the actions of the Legislature on this bill, I am convinced people will lose their life savings in fraudulent real estate transactions and we won't be able to do anything about it," said David Wayment, a white-collar-crime prosecutor in the Utah County Attorney's Office, whose opposition to the bill was ignored by legislators.

Senate Bill 64, sponsored by powerful Utah Sen. Al Mansell, R-Sandy, the former president of the Senate, takes so-called "tenancy-in-common" real estate transactions out of the jurisdiction of the Division of Securities and into the realm of the state Real Estate Division. It takes away the securities licensing requirements for those who sell the investments, which means they no longer have disclosure requirements and other protections for investors under state securities laws.

The deals in question involve several owners who put up property or other security to buy shares in commercial property, such as a strip mall. Each owns a certain piece and relies on a manager to run the property and make a profit.

These have been considered securities, and real estate agents involved in the deal often have not been able to share in commissions if they don't have a securities license. Even the critics of Mansell's bill agree that Realtors should share a commission, but they say that can be handled in ways other than dissolving protections to investors afforded by securities laws.

Mansell is a prominent Realtor and developer and the president of the National Association of Realtors.

His bill makes Utah the only state that does not consider such real estate transactions as securities. The transactions still are securities under federal law, but critics say the SEC only takes the time and resources to go after large fraudulent activities involving tens of millions of dollars. One involving a few million dollars will not attract the SEC's attention and now can avoid the grasp of state securities investigators.

"This leaves Utahns vulnerable to pyramid schemes that were prevalent in the 1970s and took millions of dollars from innocent investors," said Newton.

prolly@sltrib.com