State Securities Regulators Urge Congress to Resist Pressure to Weaken Investor Protections in Reform Proposals

WASHINGTON, D.C. December 4, 2009 – The North American Securities Administrators Association (NASAA) today urged Members of Congress to resist intense pressure by financial services industry interests to weaken the regulatory improvements necessary to strengthen investor protection.

“While high times may have returned to Wall Street, hard times persist on Main Street. Congress must not squander this opportunity to provide meaningful investor protection reforms,” said NASAA President and Texas Securities Commissioner Denise Voigt Crawford. “Investors remain outraged as they continue to suffer the consequences of the unbridled risk-taking and large-scale financial fraud that shook through financial markets last year.”

Speaking at a National Press Club Newsmakers event, Crawford voiced support for the intelligent and comprehensive approach to regulatory reform offered by the Restoring American Financial Stability Act of 2009 Discussion Draft presented last month by Senate Banking Committee Chairman Christopher Dodd (D-CT) and the Investor Protection Act of 2009, which was reported by the House Financial Services Committee and awaits debate by the full House of Representatives. These measures will go far toward insuring that investors – particularly senior investors – receive the protection they deserve.

Crawford noted strong “special interest” opposition to several vital components of regulatory reform designed to improve investor protection, and supported by state securities regulators, including:

  • increasing state regulatory authority over investment advisers with assets under management of less than $100 million;
  • ensuring that broker-dealers providing investment advice are subject to a fiduciary duty standard, and more specifically, the same standard applicable to investment advisers under the Investment Advisers Act of 1940;
  • ending mandatory pre-dispute securities arbitration; and
  • reinstating the authority of state regulators over certain Regulation D offerings.

“Powerful interests in the financial services industry have aligned to delay, derail and distort the regulatory changes to the status quo that are necessary to strengthen investor protection. But business as usual doesn’t work anymore; nor does regulation as usual,” Crawford said. “Years of deregulation at the federal level have left a legacy of failure to properly scrutinize the financial industry, as we most recently saw when the now infamous Madoff Ponzi scheme exposed major regulatory gaps at the federal level. While the recent financial crisis was the result of many industry and regulatory failures, a failure of state securities regulation was not one of them.”

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, Director of Communications
202-737-0900

2009 Headlines, Newsroom