Securities regulators seek input on database for investment advisers

An open forum to gather ideas is scheduled for Sept. 27

WASHINGTON (August 5, 1999) – State and federal securities regulators are seeking ideas from the financial planning industry, trade groups, consumer organizations and others as they design an electronic database to contain records on investment adviser firms and investment adviser representatives.

The system, to be established by the US Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA)¹, will be based on technology used in the new Web-based Central Registration Depository (CRD) coming on line later this month. That system is a national database containing licensing and disciplinary information on the nation’s nearly 600,000 stockbrokers and 5,600 securities firms.

Financial planning and investment advisory services are, by some accounts, the fastest-growing segment of the financial services industry. There are an estimated 32,000 firms and 100,000 investment adviser representatives that are required to register or file notice file with state regulators.

“The database will simplify and expedite the filing and registration process for firms and adviser representatives,” said Melanie Senter Lubin, Maryland’s Securities Commissioner and a member of the NASAA Investment Adviser Database Project Group.

“Ultimately,” Lubin said, “the information in the database would be available to investors on-line.” The first phase of the database is expected to be operational by late 2000. It will be operated and managed by the National Association of Securities Dealers (NASD), which now runs the CRD system.

NASAA is creating an advisory council to help it and the SEC implement the database. The SEC will act as a liaison to the Council; the NASD, as the project’s vendor, will take part in its regular meetings.

NASAA will host an open forum for the Council at its fall conference, in Puerto Rico, on Monday, Sept. 27. All interested parties are invited. For information on the conference visit or call Lonnie Martin in NASAA’s corporate office at 202/737-0900.

The investment adviser database is part of an ongoing effort by regulators to raise standards and increase oversight of the financial planning field. NASAA, for example, will require new investment adviser representatives to take a new competency exam, the Series 65, beginning January 1. The new exam, which will focus on ethics and knowledge of investment products and economics, will replace a shorter exam that covers mainly knowledge of securities law.

“As the financial world gets increasingly complex, investors need to have confidence that financial planners know what they’re talking about,” said Lubin. “The competency exam and the database should help ensure that trust.”

Under a 1996 federal law, the National Securities Markets Improvement Act, regulation of investment adviser firms and investment adviser representatives was divided between the SEC and state securities regulators. The SEC now regulates investment advisers with more than $25 million under management. Investment adviser representatives and the smaller adviser firms are regulated by the states.

Print Friendly, PDF & Email
1999 Headlines, Newsroom