NASAA Statement on Senator Dodd’s Financial Regulatory Reform Proposals

WASHINGTON (March 16, 2010) – The following is a statement from Denise Voigt Crawford, President of the North American Securities Administrators Association (NASAA) and Texas Securities Commissioner on the financial services regulatory reform proposal released by Senate Banking Committee Chairman Christopher Dodd.

“In seeking to gain bipartisan support for his vision of creating a 21st century solution for today’s financial services regulatory structure, Senate Banking Committee Chairman Christopher Dodd has offered a mixed bag of proposals that, in some cases, substitute accountability and protection with delay and dilution of the protections Main Street investors deserve immediately.

“State securities regulators agree that there must be a financial system in place that works for and protects Americans. Included in the bill are several proposals, long advocated by NASAA, which help accomplish that goal. For example, we are pleased that the reform package recognized the proven track record of state securities regulators and would increase state regulatory authority over investment advisers with assets under management of $100 million or less, an increase from the current level of $25 million.

“But we are profoundly disappointed that the latest bill draft has removed the single most important protection for individual investors – requiring that stockbrokers and insurance agents providing investment advice act in the best interest of their clients. This long overdue requirement has been replaced by an industry-supported yearlong study. Instead of offering protections, the reform package offers delay in the form of yet another study. Investors, particularly senior investors, need help and clarity now.

“Likewise, the new Dodd bill gives the SEC only discretionary authority to ban mandatory predispute arbitration in securities cases, but it does not require the agency to do so, nor does it set a timeframe in which to act. NASAA believes investors deserve choice and that mandatory securities arbitration must end now.

“We continue to encourage the committee to return to the states the full authority to review private placement offerings made under SEC Rule 506 of Regulation D. In its current form, the Dodd bill merely provides states the ability to review certain Form D filings in those cases where the SEC does not perform its own review within 120 days. While this provision attempts to remedy the current situation in which there is essentially no federal or state regulation for private placements, it is a disappointment for the investing public and deserves more meaningful and substantive consideration.

“We look forward to working with the Senate Banking Committee as it moves forward toward our shared goal of protecting our nation’s investors and restoring their faith and confidence in financial regulators and markets alike.”

For more information:
Bob Webster, Director of Communications

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