NASAA Says Financial CHOICE Act Would Reverse Critical Investor Protections, Sending Regulatory Policies in “Wrong Direction”

WASHINGTON, DC, April 26, 2017 – In a statement submitted to the House Financial Services Committee, the North American Securities Administrators Association (NASAA) said the proposed Financial CHOICE Act of 2017, if enacted in its current form, “would dramatically change regulatory policies in the wrong direction,” weaken important reforms and protections put in place by the Dodd-Frank Act in response to the financial crisis, and expose investors and the securities markets to significant, unnecessary and new risks.

“It is clearly evident that the changes contemplated by the bill would significantly undermine and compromise the ability of regulators to effectively enforce financial laws and regulations,” said Mike Rothman, NASAA’s President and Minnesota Commissioner of Commerce, in a written statement submitted to the committee for a hearing today on a discussion draft of the financial deregulatory legislative proposal.

“By attempting to eviscerate so many critically important reforms – weakened oversight of private securities markets and reforms; watered down provisions intended to expand fiduciary obligations to investment professionals; lowered standards for securities sold to the investing public; diluted rules that keep “bad actors” out of our securities markets; among many others – the legislation blithely aims to sweep away in one stroke scores of essential protections and modernizations to our financial regulatory architecture that were literally decades in the making,” Rothman said.

Rothman said NASAA also objects strongly to the proposal’s Section 391, which would mandate the adoption of policies governing the coordination of state and federal enforcement actions. Calling the proposed requirement “overbroad and misguided,” Rothman said it is unnecessary and potentially very disruptive in the realm of securities regulation given that state and federal securities regulators already collaborate on a voluntary basis to share information and leverage resources efficiently. “NASAA has great concerns about hampering this voluntary state-federal collaborative framework through Section 391 as written,” he said.

“NASAA’s message to Congress is simple and clear: Please continue your commitment to protecting investors and do not undermine the important and overdue reforms implemented in the wake of the financial crisis, either directly through legislative repeals, or indirectly through a lack of appropriate funding or delayed execution,” Rothman said. “It is incumbent upon members of Congress and regulators to demonstrate an unwavering commitment to Main Street investors and continue to take the steps necessary to protect them.”

In addition to concerns about the proposed legislation’s provisions regarding enforcement and regulatory authority, NASAA’s statement addresses troubling aspects relating to capital formation and investor protection in general. A full copy of the statement is available on the NASAA website at www.nasaa.org.

For More Information:
Bob Webster | Director of Communications
202-737-0900

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