NASAA Statement on Obama Financial Regulatory Reform Proposals

WASHINGTON, D.C. (June 17, 2009) – The following is a statement by North American Securities Administrators Association (NASAA) President and Colorado Securities Commissioner Fred Joseph on the release of the Obama Administration’s comprehensive plan to restructure the system of financial services regulation in the United States to better protect American investors and consumers. 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.

“Restoring investor confidence in the integrity of our nation’s financial markets is an enormous and vital undertaking. President Obama has released policy proposals to develop a financial regulatory structure designed to work for businesses, consumers and investors. These proposals recognize the value of state securities regulators in this national priority.

“The Obama plan’s five key objectives align closely with the five core principles for regulatory reform released by NASAA late last year to strengthen and enhance the protection of our nation of investors: preserve state/federal collaboration while continuing to streamline the regulatory system where appropriate; close regulatory gaps by subjecting all financial products and markets to regulation; strengthen standards of conduct; improve oversight through better risk assessment and interagency communication; and toughen enforcement and shore up private remedies.

“The Administration has recognized our concerns in a number of areas, particularly calling for a council of regulators to assist the Federal Reserve in monitoring risk throughout our financial system; addressing the pressing need for a fiduciary standard of care for broker-dealers providing investment advice and calling for legislation empowering the SEC to prohibit mandatory arbitration clauses in broker-dealer and investment adviser contracts with retail investors.

“NASAA has pressed for the application of a fiduciary standard for broker-dealers in order to enhance investor protection, eliminate confusion and promote regulatory fairness by establishing conduct standards according to the nature of the services provided, not the licensing status of the provider. The Obama Administration’s proposal recognizes that for all financial professionals, the interests of the client must come first at all times. State securities regulators also have long advocated an end to mandatory securities arbitration and criticism of this practice continues to grow. We are encouraged that the Administration’s plan calls for the SEC to conduct an objective study of the impact of mandatory arbitration.

“While the Administration’s proposals offer a positive first step in the right direction to monitor financial risks and to close the regulatory gaps that contributed to the current financial crisis, NASAA will continue to seek to ensure that state securities regulators have a salient role in this oversight process as it develops and moves forward. We stand ready to assist the Administration and Congress as they seek to build a new financial regulatory foundation that investors will look to with confidence.”

For more information:
Bob Webster, Director of Communications

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