NASAA Urges Congress to Support Dodd-Frank Wall Street Reform and Consumer Protection Act Conference Report

WASHINGTON (June 29, 2010) –The North American Securities Administrators Association (NASAA) today urged Congress to support the landmark Dodd-Frank financial regulatory reform legislation, citing the proposal’s recognition of the strong investor protection role of state securities regulators.

“State securities regulators applaud Chairmen Christopher Dodd and Barney Frank for their extraordinary efforts to move significant financial reform legislation through the conference committee deliberations. We believe the conference report provides an unprecedented opportunity to restore investor confidence in our financial markets, and we support its passage,” NASAA wrote in a letter to House and Senate leadership.

NASAA noted that many provisions in the Dodd-Frank conference report acknowledge the strong role of state securities regulators in strengthening much-needed protections for investors. “We urge you to vote for the conference report when it reaches the floor this week to support a number of provisions that will empower state securities regulators with additional responsibility to effectively protect citizens in your states from securities fraud violations,” NASAA wrote.

Specifically, the conference report would increase state authority regarding investment adviser regulation by raising to $100 million from $25 million the assets under management threshold under which investment advisers must register with state securities regulators. The report allows investment advisers within the $25 million to $100 million range that are required to be registered in 15 or more states to remain under SEC jurisdiction. “This will enable the SEC to focus on the largest investment advisers while the smaller advisers would continue to be subject to strong state regulation and oversight,” NASAA wrote.

Conferees also agreed to include state securities, banking and insurance regulators as nonvoting members of the Financial Stability Oversight Council, which will be established to identify risks to U.S. financial stability and promote market discipline.

In addition, the conference report includes provisions advanced by state securities regulators to strengthen investor protection. Conferees agreed to:

  • Adjust the definition of an “accredited investor” by removing the primary residence from the $1 million net worth standard;
  • Include “bad boy” disqualifier language to prevent recidivist violators of the law from conducting securities offerings under SEC Regulation D, Rule 506;
  • Provide the SEC with rulemaking authority to prohibit or impose conditions or limitations on the use of mandatory predispute arbitration agreements;
  • Create a grant program for up to $500,000 for a state that has adopted the NASAA and NAIC Model Rules on the Use of Senior Designations; and
  • Include a state securities regulator as a member of the SEC’s Investor Advisory Commission.

NASAA also noted the disappointment of state securities regulators that Congress decided not to provide investors with the much-needed immediate benefit of the fiduciary duty standard of care established by the Investment Advisers Act for financial professionals who give investment advice. “We look forward to the timely completion of the study called for in the legislation and the subsequent rulemaking to impose the strong fiduciary duty standard to all who provide personalized investment advice about securities,” NASAA said, noting that it will work with the SEC as it conducts its study.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.

For more information:
Bob Webster, NASAA Director of Communications

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