NASAA Applauds Obama Directive Affirming the Value of State Regulatory Authority

WASHINGTON, D.C. (June 10, 2009) – The North American Securities Administrators Association today commended the Obama administration for affirming the vital role that state regulators play in protecting American investors and consumers.

“We sincerely appreciate your recognition that states have frequently been more aggressive than the national government in protecting the public’s interest,” NASAA President and Colorado Securities Commissioner Fred Joseph wrote in a letter to President Obama, thanking him for his May 20 directive setting legal limits on regulatory preemption. “You have sent a strong signal that our nation’s citizens are served best when the state-federal partnership works harmoniously and with mutual respect.”

Joseph outlined the distinctive investor protection role of state securities regulators. “Our members enjoy a unique proximity to investors and to the industry participants within their state borders. As a result, state securities regulators are often the first to investigate and uncover our nation’s latest and most damaging frauds.”

Over a number of years, Congress and previous administrations have repeatedly sought to preempt state regulation. For example, in 1996, Congress passed the National Securities Markets Improvement Act (NSMIA), which dramatically curtailed the authority of state securities regulators to oversee many aspects of the securities markets, ranging from private offerings under Regulation D to investment advisers with more than $25 million in assets under management. “As your recent order recognizes, federal agencies have compounded the problem by extending the scope of preemption beyond Congressionally intended boundaries and in ways that pose serious threats to investor and consumer protections under state law,” Joseph wrote.

NASAA’s letter urged President Obama to continue to support the enormous value of state securities regulation as his administration moves forward with financial services regulatory reform proposals. “The enormous challenge of regulating our financial markets can only be met through the combined efforts of state and federal regulators, working together to protect both investors and the integrity of the marketplace,” Joseph wrote. “For that reason, to address what many regard as the most urgently needed reform, we endorse the creation of a Systemic Risk Council, comprised of representatives from all federal and state regulators in securities, banking and insurance, and tasked with the responsibility for monitoring and limiting the accumulation of risk in our financial markets. With our unique position on the frontlines of investor protection, state regulators are essential to the success of any remedy aimed at controlling systemic risk.”

To read the complete text of the letter, click here.

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, the provinces and territories of Canada, and Mexico.

For more information:
Bob Webster, Director of Communications
202-737-0900

2009 Headlines, Issues & Advocacy, Newsroom, Preemption