NASAA Statement On State Investigation of Morgan Stanley Mutual Fund Sales Practices

WASHINGTON (July 14, 2003) –The following is a statement by Christine A. Bruenn, President of the North American Securities Administrators Association (NASAA), regarding the enforcement action against Morgan Stanley announced today by Massachusetts Secretary of State William F. Galvin and New York State Attorney General Eliot Spitzer. The oldest international organization devoted to investor protection, NASAA was founded in 1919 and is the voice of securities agencies responsible for grass-roots investor protection and efficient capital formation. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Canada, Mexico and Puerto Rico.

“The enforcement action announced today by Massachusetts and New York state securities regulators is typical of the aggressive and successful steps states take to protect Main Street investors from financial fraud and abuse. State securities regulators have consistently identified problems arising from misconduct by firms at the local level. Equally important, states have effectively used their authority to tailor corrective actions to specific cases of wrongdoing.

“Unfortunately, some in Congress are challenging this authority. As the local cops on the securities beat, we are strongly opposed to any federal legislation that handcuffs the states in our efforts to take appropriate enforcement actions against specific brokers in violation of the securities laws.

“Legislation now being considered by the House Committee on Financial Services could jeopardize any corrective actions that may result from today’s announcement. As amended last week, The Securities Fraud Deterrence and Investor Restitution Act (H.R. 2179) would curb the authority of state securities regulators to negotiate agreements with firms or individuals that violate the nation’s securities laws.

“H.R. 2179 is important legislation and contains many powerful tools to help protect investors. Congress can make these protections even stronger by removing Section 8(b). This provision would, for example, prevent states from imposing tough disclosure requirements on specific securities brokers, who by their own misconduct in violation of the law have proven that they have placed personal profit above the needs of investors. Today’s announcement by Massachusetts and New York state securities regulators clearly demonstrates that now is the time to strengthen, not weaken, the abilities of state securities regulators to take decisive action in the ongoing fight against fraud.”

For More Information:
Bob Webster, Director of Communications

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2003 Headlines, Newsroom