Regulators must act to restore investor confidence, says top state securities cop; New NASAA President Christine Bruenn urges continued cooperation among federal, state and industry regulators; vows to fight pre-emption
WASHINGTON (October 1, 2002) – The nation’s top state securities cop said today regulatory action is key to restoring investor confidence in the markets.
Christine Bruenn, Maine Securities administrator and new president of the North American Securities Administrators Association (NASAA¹), told attendees at NASAA’s 85th annual conference in Philadelphia: “The challenge for all of us in this room today – regulators and members of the industry – is to act to restore investor confidence in our markets. Specifically we need to get the investigations of research analysts’ conflicts of interest done – done right and done as quickly as possible. It’s in no one’s interest to have these investigations hanging over our markets any longer than necessary.”
Bruenn said recent corporate scandals have proven wrong those who pushed for less regulation, particularly by state securities regulators. Bruenn singled out a June attempt to pre-empt state regulatory authority, in the wake of a coordinated state investigation of Wall Street research analysts.
“Our markets may be global, but securities are sold locally,” said Bruenn. “(State securities regulators) are the local cops on the beat. No one can police the retail point of sale better than we can. We’ll fight for investors, and we’ll fight, as we did in June, any attempt to keep us from doing our jobs.”
State securities regulators, Bruenn added, have a “long and rich history of protecting investors,” that complements the focus and resources of federal regulators.
“Newcomers we’re not,” Bruenn said. “The states have had securities laws decades longer than the federal government. Yes, the SEC is in the best position to make national rules for our national markets. And we are perfectly positioned to give the SEC input, advocate for standards that will best protect investors and unite with the SEC, when appropriate, to bring enforcement actions.”
While calling for tough, effective and efficient regulation, Bruenn said restoring investor confidence is a responsibility regulators share with the securities industry.
“Everyone – regulators and members of the securities industry – should be concerned about the confidence investors have in American corporations – and our financial markets,” Bruenn said. “It’s not only vital that investors have confidence in (our) markets, but that the companies and markets in fact be worthy of that confidence.”
Bruenn pledged to continue the work done by previous NASAA presidents, including the promotion of more uniform regulation among states, especially in the registration and licensing of broker-dealers and their representatives, as well as advocating adoption of the Investment Adviser Registration Depository (IARD), which contains, among other things, disciplinary history for firms and individuals.
Information from the IARD is available to investors via the Internet, Bruenn noted, making it easier for them to wisely select an investment advisory firm.
Under federal law, states have sole regulatory authority over investment advisory firms with less than $25 million under management. The Securities and Exchange Commission regulates larger investment advisory firms. The IARD is jointly owned by the states and the SEC, and administered by the National Association of Securities Dealers. So far, 44 states have committed to adopt the IARD, either by administrative order or through legislation. Bruenn also pledged to work to further improve NASAA’s training of members and staff and to encourage more involvement with the organization, particularly by securities administrators.
“Investors are the largest constituent group in the United States today — bigger than organized labor, Democrats, Republicans, Baby Boomers, even AARP members,” Bruenn said. “We have a duty to serve and protect them. As regulators, our jobs have never been more important or demanding.”
A graduate of Memphis State University law school, Bruenn began her career with the Maine Office of Securities in 1987 as director for enforcement, licensing and examination activities. In 1997 she was promoted to securities administrator. She has served NASAA as treasurer and on the Investment Adviser section, the Broker-Dealer Practices committee, the Uniform Securities Act committee, the CRD Steering committee and the Privacy project group.