NASAA Offers Pro-Investor Legislative Agenda

Agenda Outlines How 111th Congress Can Help Protect Investors

WASHINGTON, D.C. January 29, 2009 – State securities regulators today called upon Congress to take bold actions to better protect Main Street investors amid the increasing challenges of a faltering economy. The North American Securities Administrators Association (NASAA) outlined a sweeping legislative agenda for the 111th Congress aimed at strengthening investor protection, restoring state authority in certain areas, and providing greater transparency and accountability for those in the financial services industry and in government who share responsibility for the prosperity and safety of investors.

“Our agenda focuses on the legislative changes that are most relevant to the millions of Main Street Americans who look to Wall Street, regulators and lawmakers to help them build and safeguard their financial security,” said NASAA President and Colorado Securities Commissioner Fred Joseph. “With so much at stake, NASAA’s top legislative priority is to protect investors by preserving state securities regulatory authority over those who offer investment advice and sell securities.”

NASAA framed its legislative proposals in terms of its five Core Principles for Regulatory Reform, released in November 2008. NASAA’s legislative agenda offers specific pro-investor proposals that will help preserve the features of our regulatory system that work, and instituting new measures that are necessary to adequately protect the investing public and our markets as a whole.

NASAA’s legislative agenda calls for increasing the transparency of derivative instruments; authorizing the regulation of hedge funds; imposing the fiduciary standard to all investment professionals; strengthening the regulation of short sale transactions; updating and strengthening the accredited investor definition; eliminating conflicts within credit rating agencies; enhancing congressional review and increasing the transparency of regulatory initiatives that impact investors; and removing hurdles facing private plaintiffs who seek damages for securities fraud.

Among the changes NASAA suggests is restoring the regulatory authority of state securities regulators that has been removed in recent years through regulatory, judicial and legislative initiatives. For example, NASAA asked Congress to restore the authority of state securities regulators to license independent agents who sell certain certificates of deposit, including Jumbo CDs exceeding FDIC insurance limits. This authority was preempted by the Office of Thrift Supervision in 2004. Congress should also preserve the authority of state regulators to protect investors from fraud and abuse in the banking and securities areas. This authority was removed in 2003 by the Office of the Comptroller of the Currency, which vested the OCC with all authority over national banks and their subsidiaries.

NASAA also asked Congress to amend the Securities Act of 1933 to reinstate state regulatory oversight of all offerings made under Rule 506 of Regulation D. State oversight was removed by the National Securities Markets Improvement Act of 1996, and state securities regulators have determined that many Rule 506 offerings are fraudulent. “These offerings also enjoy an exemption from registration under federal securities law, so they receive virtually no regulatory scrutiny,” Joseph said.

“Implementing those changes will require a broad range of actions, both legislative and regulatory, but at the heart of the Core Principles is a call for decisive Congressional action,” Joseph said. Joseph presented NASAA’s 13-point pro-investor legislative agenda during a news conference at the National Press Club.

“NASAA is committed to working with the Obama Administration and the 111th Congress to ensure that the nation’s financial services regulatory regime undergoes the important changes that are necessary to enhance Main Street investor protection, which state securities regulators have provided for nearly 100 years,” Joseph said.

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.

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Remarks by Fred Joseph at National Press Club

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Bob Webster, Director of Communications
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2009 Headlines, Newsroom