Written Statement of Denise Voigt Crawford
President, North American Securities Administrators’ Association, Inc.
Commissioner, Texas Securities Board
Submitted to the Senate Special Aging Committee
and House Employer-Employee Relations Subcommittee
June 2, 1998
As the national voice of the state securities agencies, NASAA supports financial services reform that will continue to provide essential investor protection and strengthen the integrity of our securities markets.
Financial services reform must be congressionally directed, not dictated on an ad-hoc basis by federal regulators and agencies.
NASAA strongly supports and upholds the ideals of functional regulation of securities, but it must be identical regulation, not comparable or similar regulation. We welcome banks, as well as insurance companies, into the securities business under the same complementary state/federal securities oversight system.
The Securities and Exchange Commission and state securities regulators should be the only primary regulators of securities activities regardless of the legal structure of the entity engaging in such activities.
NASAA believes language in Section 104 may have the unintended consequence of preempting state securities enforcement actions and wants to work with the Committee to improve this section of the bill.
NASAA supports appropriate regulatory deference and respectfully requests that Section 111 be amended to defer to state securities regulators for certain broker/dealer exams or to examinations of state registered advisers to avoid potentially duplicative examinations.
The “qualified investor” definition should be amended to ensure that certain government entities receive adequate professional financial planning advice to meet the sophistication or knowledge requirements necessary to be a “qualified investor.”
Chairman D’Amato and Members of the Committee:
I am Denise Voigt Crawford, the Texas Securities Commissioner and President of the North American Securities Administrators Association (“NASAA”).1 I commend you and Senator Sarbanes for conducting these hearings, and I appreciate the opportunity to discuss several important issues associated with HR 10, The Financial Services Act of 1998 (“Proposed
Act”). Your determination to explore all of the critical issues and move forward with a bill this year should be applauded.
NASAA believes the time is ripe for financial services modernization, and it is the responsibility of Congress to direct comprehensive financial services reform. The recent trend toward federal regulators and agencies dictating policy that impacts existing law without congressional oversight is clearly not the most effective manner in which to reform financial services.
NASAA views Congressional analysis of the current system and Congressional action to modernize regulation as the key to meaningful and lasting reform. To that end, NASAA has appeared before Congress on a number of occasions to reiterate our strong support for congressionally directed financial services reform that will continue to provide essential investor protection and preserve faith in the integrity of our securities markets.
With a record number of households investing in the securities markets, investor protection, which is the basis for confidence in the securities markets, should be a top priority as you move forward with this legislation. We hope that our expertise and experience as state securities regulators will be useful to you.
Our federal counterparts at the Securities and Exchange Commission (“SEC”) tend to focus upon the oversight of large corporate offerings and the globalization of the marketplace. State securities regulators, on the other hand, are closest to the investing public and serve as the local cop on the beat. We have led numerous enforcement actions especially in the area of micro-cap fraud, and are responsible for the registration and licensing of securities professionals. Most importantly, we put crooks in jail. Throughout 1996, there were 236 criminal convictions by state securities agencies.
NASAA worked closely with this Committee during the deliberations and negotiations surrounding the National Securities Markets Improvement Act of 1996 (“NSMIA”). We have experience with streamlining regulation, and know firsthand that with true functional regulation it is possible to bifurcate without weakening regulatory oversight or unduly confusing the marketplace. Our experience of the last several years has taught us “Perfection is the enemy of the good.” Therefore, we are very supportive of the Committee’s efforts to achieve financial services reform even though this bill may not meet every goal of every party.
Our main message to you today is that NASAA strongly supports and upholds the ideals of functional regulation of securities activities and products. However, the regulation must be identical, not merely comparable or somewhat similar regulation to be truly “functional.” We welcome banks, as well as insurance companies, into the securities business under the same complementary state/federal securities oversight system. We do not believe, for example, that banking regulators could, overnight, create enforcement divisions to monitor sales practices as the NASDR, the SEC and the states do currently. Even if they could, to do so would constitute unnecessary duplication. Mr. Chairman, NASAA believes that the SEC and state securities regulators should be the only primary regulators of securities activities regardless of the legal structure of the entity engaging in such activities.
Residents of our states investing in securities should receive the same disclosures and have the same investor protections whether he or she invests through a broker/dealer, a bank, an insurance company or a mutual fund. Employees who sell securities should be subject to the same licensing qualifications whether their employer is a bank, an insurance company, a
securities firm, or something else.
Actions taken in 1996 and 1997 by the states of Texas and Florida, respectively, exemplify the benefits of functional regulation to the marketplace. Texas and Florida received numerous investor complaints regarding the sales activities of NationsSecurities, a registered broker/dealer subsidiary of NationsBank. These states alleged that NationsSecurities misrepresented the safety and risks associated with a particular investment vehicle.
In a settlement reached by the State of Texas, NationsBank was required to make offers of rescission to investors and undertake significant compliance enhancements. It also agreed to fund an extensive investor education program. This is one example of functional regulation that works. Functional regulation worked in the case of NationsBank largely because the securities activities of the bank were effected through a registered broker/dealer subsidiary.
The version of HR 10 that passed the House of Representatives on May 13, 1998, is a positive step in the direction of functional regulation. We worked closely with the House to ensure that adequate safeguards are in place to protect investors, and we enthusiastically supported the Bliley/Leach/Dingell amendment that overwhelmingly passed by a vote of 407 – 11.
a. Section 104
NASAA has adamantly fought to preserve state securities enforcement authority. With our nation’s securities markets at all-time highs, state and federal regulators are faced with a potential bull market in fraud in the micro-cap market. The language in the Bliley/Leach/Dingell amendment nearly, but does not completely preserve this authority. Our concerns with respect to preservation of state antifraud authority are focused on the potential, unintended consequences surrounding Sections 104 and Section 309.
NASAA believes that the language contained in Section 104, as passed by the House, still may have the unintended consequence of preempting state securities enforcement actions. Specifically, Section 104 preempts all state law that would “prevent or significantly interfere with” the ability of an insured depository institution or wholesale financial institution (“WFI”) to
engage in any activity, so long as the affiliation is permitted by the Proposed Act or any other provision of federal law. See HR 10, §104(b)(1). State antifraud authority could reasonably be argued to “significantly interfere” with a bank’s insurance sales activities, thus preempting important state enforcement and licensing authority. Actions taken by the states and more recently by the SEC with respect to Robert E. Brennan, head of the now-defunct brokerage firm First Jersey Securities provide a timely “reallife” example. The SEC recently imposed an industry-wide bar against Brennan.3 He subsequently agreed to pay up to $55 million to investors who accused Brennan of cheating them out of hundreds of millions of dollars. In the event the language contained in Section 104(a) is not amended, Brennan would be free to associate with a bank or WFI and engage in private placements of micro-cap equity securities.5 This affiliation would be permissible because Brennan is not a subject of the SEC’s bar. Therefore should a state securities agency attempt to deny Brennan’s activities based on state enforcement cases, Brennan could reasonably argue that the state enforcement authority “significantly interferes” with his ability to affiliate with a bank.
We strongly support The Bliley/Leach/Dingell language included in the House passed version of HR 10 that would specifically preserve state antifraud authority in Section 104(b)(4). This amendment solves most, but not all, of the problem.
b. Section 104(a)
It is important to note that NASAA supports the ability of insured depository institutions and WFIs to affiliate with various entities. However, language in Section 104(a) would preempt state law if it prevents or significantly interferes with the ability of an insured depository institution or (WFI) to be affiliated with an entity as long as the affiliation is permitted by the proposed Act or elsewhere in federal law. The current version of HR 10 could provide recidivist broker/dealers and investment advisers the ability to thwart state licensing and enforcement actions simply by affiliating with a bank. For example, in the event a state denies the registration of a financial planner, HR 10 would permit this planner to affiliate with a bank to provide advisory services through the bank. State enforcement actions could be argued to significantly interfere with the planner’s ability to affiliate.
We would like to work with this Committee to ensure that existing ambiguity is eliminated and that state securities enforcement authority is preserved in its entirety. NASAA has drafted corrective language that is attached to this testimony, and we welcome the opportunity to work with you to achieve that goal.
c. Asset-Backed Securities
HR 10 includes various exceptions from the definitions of both “broker” and “dealer.” The combined effect is to permit banks to engage in the offer and sale, as agent, of “traditional banking products,” a definition that includes asset-backed securities. Asset-backed securities are debt securities “backed” by loan paper or other accounts receivables. The revenue stream from these underlying assets is used to make interest and principal payments owed to bondholders. The safety of the asset-backed security is directly related to the underlying revenue stream. States have seen a number of offerings of asset-backed securities that were securitized by unstable and unreliable revenue streams such as credit card receivables and used car loan agreements. NASAA does not believe that an unregistered entity should be
permitted to distribute these risky securities to deposit holders that are not “qualified.”
NASAA does not oppose banks’ abilities to sell these securities to qualified investors, assuming that these investors are able to understand and shoulder the risk inherent with the purchase of asset-backed securities. Our concern is not with banks selling these products to certain “qualified investors,” but that few restrictions are being placed on a bank’s ability to distribute the securities. NASAA believes the standard in Section 206 of HR 10 is simply too subjective to provide banks with meaningful guidance regarding which investors are “suitable” and which are not.
d. Regulatory Deference
Section 111 of the Proposed Act requires that banking regulators defer to state insurance regulators for insurance examinations, and to the SEC with respect to registered broker/dealers and SEC-registered advisers. While NASAA supports appropriate regulatory deference to reduce any burden on the regulated community, we would respectfully suggest that this list is incomplete. There is no deference to state securities regulators for certain
broker/dealer exams, or to examinations of state-registered advisers.
After enactment of NSMIA, states have sole examination and inspection authority over approximately 65% of the registered investment advisers in this country. State regulators are also the primary examiners of the approximately 60,000 broker/dealer branch offices. All of these examinations are pivotal to the states’ regulatory enforcement initiatives. Banking regulators would be required to defer to the SEC with respect to the SEC’s examination of SEC-registered advisers. However, banking regulators would be free to re-examine a state-registered adviser, despite the fact that state securities regulators may have just examined that adviser. The reasons for this are that, as discussed above, banking regulators are not
required to defer to states, and that state-registered IAs are omitted from the definition of functionally regulated subsidiary. This omission appears to be an oversight, but it means that state-registered advisers would not be subject to the same regulatory deference as SEC registered advisers and would likely be subject to potentially duplicative examinations by securities and banking regulators. This is another area where NASAA would like to work with the Committee to correct an oversight and improve the bill.
e. Qualified Investor
In general, NASAA believes that certain investors, due to their wealth, institutional nature, or sophistication do not require the protections afforded by federal and state securities laws. Other investors may not fully appreciate the risks associated with an investment in such securities and the effect that certain disclosure obligations will have on the investment. NASAA’s chief concern with respect to the definition of “qualified investor” in the Proposed Act is the inclusion of “any government or political subdivision, agency, or instrumentality of a government who owns and invests on a discretionary basis not less than $50,000,000 in investments . . . ”
Many county and local governments will meet this threshold yet not possess the sophistication or knowledge to be appropriately deemed “qualified investors.” Many state, county and local government pensions are advised by volunteers or elected or appointed officials who are not principally engaged in the business of investment management. To remedy, NASAA would respectfully suggest that government entities be treated as “qualified investors” only if a registered broker/dealer, investment adviser, insurance company, or insured depository institution professionally manages the government entitites’ investments. It would appear that other regulatory safeguards, existing in ERISA and elsewhere in federal, state and common law, would provide adequate protections to the participants and beneficiaries of these funds. In the alternative, these government entities should be required to own a greater quantity of investments such as $250,000,000 to increase the likelilhood that professional advisers will manage the portfolio due to its size.
Although I have raised some of NASAA’s specific, but limited concerns about HR 10, I do want reiterate our strong overall support for Congressionally mandated financial services reform. Mr. Chairman, NASAA believes the current version of HR 10 is an improvement over earlier versions, and we want to work with you to ensure the bill that eventually becomes law contains no diminution of protections for our nation’s investors.
SUGGESTED AMENDMENTS TO HR 10
SECTION 104; SECTION 309: STATE ENFORCEMENT
a. Section 104(a)
NASAA would respectfully request that this language be amended slightly to extend
to the preemptive language contained in Section 104(a). This language, similar to other
language contained in the Managers Amendment, limits the ability of state enforcement
authority to that preserved by NSMIA. Amended language would appear as follows:
* * *
(c) Subsections (a) and (b) shall not be construed as affecting
the jurisdiction of the securities commission (or any
agency or office performing like functions) of any State,
under the laws of such State, to investigate and bring
enforcement actions, consistent with section 18(c) of the
Securities Act of 1933, with respect to fraud or deceit
or unlawful conduct by any person, in connection with
securities or securities transactions.
b. Section 309
Section 309 preempts all state laws that would “prevent or significantly interfere
with the ability of any insurer [or an affiliate] . . . to become a financial holding company
or to acquire control of an insured depository institution.” NASAA’s concern is focused
on the affiliate of the insurer, which could be a state-registered broker-dealer or
investment adviser, and the ability of this language to preempt states’ ability to grant or
deny registration to such entities. In the event a state revokes registration of a brokerdealer
due to insolvency, for example, NASAA is concerned that the language contained
in 309 could be used by an insurer or affiliate to argue that the lawful state action is one
that would “prevent or significantly interfere” with the insurer’s affiliate to “become a
financial holding company.”
Similar, yet somewhat narrower, concerns exist with respect to Sections 309(2) and
(3). NASAA would respectfully suggest that any bill introduced by the Senate in the
105th Congress contain language similar to that proposed with respect to Section 104,
above. This language could appear as follows:
* * *
(4) Subsections (1), (2), and (3) shall not be construed as
affecting the jurisdiction of the securities commission (or
any agency or office performing like functions) of any State,
under the laws of such State, to investigate and bring
enforcement actions, consistent with section 18(c) of the
Securities Act of 1933, with respect to fraud or deceit or
unlawful conduct by any person, in connection with securities
or securities transactions.
“QUALIFIED INVESTOR” DEFINITION
NASAA is concerned that the standard for certain types of “qualified investors” is
inconsistent with the stated goal of providing necessary and appropriate protections for
a. Governmental Entities as Qualified Investors
NASAA is concerned that many county and local governments will meet the
$50,000,000 threshold yet not possess the sophistication or knowledge to be
appropriately deemed “qualified investors.” This relatively low standard and the absence
of any required professional management make this part of the definition, NASAA
believes, inadequate. Many state, county, and local government pensions are advised by
volunteers, or elected or appointed officials that are not principally engaged in the
business of investment management. Requiring that professionals manage the
investments, or that the investments be of a size where the fund will be professionally
managed as a matter of course, would greatly decrease the likelihood that entities that sell
to qualified investors will later become defendants in securities suits alleging unsuitable
recommendations or other violations of the securities laws.
To remedy, NASAA would respectfully suggest that governmental entities be treated
as “qualified investors” only if a registered broker/dealer, investment adviser, insurance
company, or insured depository institution professionally manages the investments. In
the alternative, NASAA would respectfully suggest that this classification of qualified
investor be required to own and invest a greater quantity of investments, such as $250
million. This higher threshold would greatly increase the likelihood that professional
advisers manage the portfolio, due to its size. Language addressing this issue could
appear as follows:
* * *
(iii) any governmental or political subdivision, agency, or
instrumentality of a government who owns and invests on a
discretionary basis not less (I) than $250,000,000 in
investments, or (II) than $50,000,000, provided that the
investments are managed by (AA) a bank (as defined in
paragraph (6) of this subsection);6 (BB) a savings and
loan association (as defined in section 3(b) of the
Federal Deposit Insurance Act), (CC) a broker, dealer, or
insurance company (as defined in section 2(a)(13) of the
Securities Act of 1933), (DD) an investment adviser
6 The ’34 Act defines the term “bank” at Section 3(a)(6).
registered under the Investment Advisers Act of 1940 or
with any state, or (EE) a foreign bank (as defined in
section 1(b)(7) of the International Banking Act of
Proposed exceptions from the definitions of both “broker” and “dealer” would permit
banks to engage in the underwriting of certain asset-backed securities. Proposed ’34 Act
§ 3(a)(5)(C)(iii) (Section 202 of the Proposed Act). This exception is coupled with
another exception from the definition of “broker” that permits banks to engage in the
offer and sale, as agent, of “traditional banking products,” a definition which includes
It is NASAA’s understanding that, while broad exceptions exist for banks under the
’34 Act, these products would still be subject to registration under Section 5 of the
Securities Act of 1933 (“’33 Act”). As such, the bank/issuer/distributor/seller of these
products could avail itself of the panoply of exemptions from registration, most notably
Regulation D, Rule 506.7 Rule 506 would permit banks to engage in the nonpublic offer
and sale of these securitzed loan pools to existing depositholders, assuming they met the
“qualified investor” standard or were otherwise permissible purchasers.
NASAA does not oppose banks’ abilities to sell these securities to certain investors,
assuming that these investors are able to understand and shoulder the risks inherent with
the purchase of asset-backed securities. Additionally, NASAA believes that these
investors are able, either independently or through an investment professional, to
understand fully the potential conflict of interest present when a bank securitizes its own
loan portfolio, prices these securities without the assistance of an independent
underwriter, and sells them to bank depositors. NASAA’s concern is not with banks
selling these products to certain “qualified investors,” but that banks can sell these
“traditional banking products” to anyone who, in the bank’s estimation, has an
opportunity “evaluate the information available, as determined under generally applicable
banking standards and guidelines.” HR 10, § 206(a)(1)(E). This language would appear
exceedingly subjective and placing little real restrictions on a bank’s ability to distribute
the securities. NASAA believes this standard is simply too subjective to provide banks
with meaningful guidance regarding which purchasers are “suitable” and which are not.
a. “Traditional Banking Product”
NASAA concurs that many of the products covered by Proposed Section 206 are, in
fact, “traditional” banking products. Banks offering and selling these products would be
excepted from registration as a broker or dealer, and the securities products will typically
be exempt from the registration requirements of the ’33 Act. NASAA would respectfully
suggest that the scope of what is a “traditional banking product” be narrowly tailored to
avoid an adverse impact on investors or on non-bank broker/dealer firms competing with
banks for the similar market share.
NASAA is concerned with Section 206(a)(1)(E) of the Proposed Act, which would
permit fractionalized interests in loan portfolios and other bank assets to be considered
7 17 CFR § 230.506 (1997).
“traditional banking products.” NASAA would note that banks have been in the business
of creating and distributing such securities products for little over a decade.8 This short
history would not appear to qualify as “traditional.” It is worth noting that, when banks
began packaging and selling these securitized revenue streams, the Dow Jones Industrial
Average (“DJIA”) was approximately 2000.9 Yesterday the DJIA closed at over at
Today, collateralized mortgage obligations and other “securitized” income streams
are subject to the independent due diligence of the investment banking firm that creates,
prices, and ultimately distributes the securities to investors. The independent “check”
undertaken by third party grantors is crucial to assuring that the banks are not packaging
these products to shift the risk of bad loans, defaulting mortgages, or insolvent borrowers
onto investors. States have denied the registration and taken enforcement actions
regarding certain offerings of securitized used car loans and other types of risky,
unpredictable, securitized revenue streams.
NASAA believes that these potentially unstable products be distributed only to those
individuals that can legitimately appreciate and shoulder the risks associated with
investing in these securities. The “qualified investor” standard defined in Proposed ’34
Act Section 3(a)(55), assuming NASAA’s suggested amendment, could be an appropriate
standard. NASAA objects, however, to the language at Proposed Section 206(E)(ii),
which would essentially create a “self-policing” mechanism for banks themselves,
without any quantitative standards, to determine whether an investor is suitable. It should
be noted that broker-dealer firms are subject to more rigorous and effective “suitability”
rules limiting the range of possible investors in these asset-backed products.11 NASAA
would contend that this language essentially “undoes” many of the protections built into
the definition of “qualified investor,” as contained in the Proposed Act.
b. Suggested Revision
In the event Section 206(a)(1)(E) remains in the Proposed Act, NASAA suggests that
this language be amended to limit potential purchasers to those “qualified investors,”
assuming the definition contained in Section 207 of the Proposed Act, and strike the
remainder of Section 206(a)(1)(E)(ii) of the Proposed Act:
8 The case that authorized specifically banks’ ability to distribute these asset-backed securities was
decided in 1989. SIA v. Sec. Pac. Nat’l Bank, 885 F.2d 1034 (2d Cir. 1989).
9 See Dow Jones Averages, 1980-1989, <http://indexes.dowjones.com/chrt1980.html> (visited
10 See <http://www.bloomberg.com/welcome.html> (visited 06/22/98).
11 To the extent the securities are offered publicly and are not “covered securities” issuers are also
required to comply with the “suitability” requirements contained in the NASAA Statement of Policy
Regarding Asset Backed Securities, NASAA Reports (CCH) ¶ 501 (Nov. 1995) (for non-investment
grade securities, a minimum gross income of $45,000 or minimum net worth of $150,000, exclusive
of home furnishings, and automobile).
* * *
a participation in a loan which the bank or an affiliate
of the bank (other than a broker or dealer) funds,
participates, or owns that is sold to qualified
* * *
Alternatively, in the event the Proposed Act would permit asset-backed securities to
be sold to unaccredited, unsophisticated investors, NASAA would respectfully suggest
that the “dealer” exception for these products be eliminated. This elimination would be
consistent with Section 18(b)(3) of the ’33 Act, as amended by NSMIA, which creates a
class of covered securities for those securities sold exclusively to “qualified
purchasers.”12 In doing so, the bank would be required to create the product through a
guarantor trust arrangement with an investment bank. NASAA believes this independent
“check” is crucial to structuring, pricing, and distributing the securities in a manner
consistent with current practices and fair to investors.
12 15 USC § 77r(b)(3) (1997).
SECTION 111 – REGULATORY DEFERENCE AND
FUNCTIONALLY REGULATED SUBSIDIARIES
Section 111 of the Proposed Act amends Section 5(c) of the Bank Holding Company
Act of 1956 (“BHCA”) by requiring that banking regulators defer to state insurance
regulators with respect to insurance examinations, and to the SEC with respect to
registered broker/dealers and SEC-registered advisers. While NASAA supports
appropriate regulatory deference to reduce any burden on the regulated community,
NASAA would respectfully suggest that this list is somewhat incomplete. There is no
deference to state securities regulators for certain broker/dealer exams, or to examinations
of state-registered advisers.
Revising BHCA Section 5(c)(5)(B) to defer to state securities regulators, where
appropriate, will not alone correct this oversight. The definition of “functionally
regulated depository institution” would also have to be amended. NASAA would
respectfully note that state-registered advisers are inappropriately omitted from this list.
The effect of this omission is to require the Board, to the extent possible, to defer to an
SEC examination of an adviser subject to federal registration, but essentially to forbid the
same deference to state securities regulators with respect to a state-registered adviser.
This oversight means that state-registered advisers would not be subject to the same
regulatory deference as SEC-registered advisers, which means that they would be more
apt to be subject to potentially duplicative examinations by securities and banking
To remedy what appears to be merely an oversight, NASAA would respectfully
suggest that this language be amended as follows:
“(c) REPORTS AND EXAMINATIONS.—
* * *
“(C) DEFINITION.—For purposes of this subsection, the term
‘functionally regulated nondepository institution’ means—
“(i) a broker or dealer registered under the Securities
Exchange Act of 1934;
“(ii) an investment adviser registered under the Investment
Advisers Act of 1940 or with any State, with respect to the investment
advisory activities of such investment adviser and activities
incidental to such investment advisory activities; . . . .
* * *
* * *
“(E) DEFERENCE TO OTHER EXAMINATIONS.—The Board shall, to the fullest
extent possible, address the circumstances which might otherwise permit
or require an examination by the Board by forgoing an examination and
instead reviewing the reports of examination made of
“(i) any registered broker or dealer by or on behalf of the
Securities and Exchange Commission;
“(ii) any registered investment adviser properly registered
by or on behalf of either the Securities and Exchange Commission or any
“(iii) any licensed insurance company by or on behalf of any
state regulatory authority responsible for the supervision of insurance
“(iv) any other subsidiary that the Board finds to be
comprehensively supervised by a Federal or State authority.
“(A) IN GENERAL.—The Board shall not, by regulation, guideline,
order or otherwise, prescribe or impose any capital or capital adequacy
rules, guidelines, standards, or requirements on any subsidiary of a
financial holding company that is not a depository institution and –
“(i) is in compliance with applicable capital requirements of
another Federal regulatory authority (including the Securities and
Exchange Commission) or State insurance authority; or
“(ii) is properly registered as an investment adviser under
the Investment Advisers Act of 1940 or with any State.
* * *
“(5) FUNCTIONAL REGULATION OF SECURITIES AND INSURANCE ACTIVITIES. — The Board
shall defer to—
“(A) the Securities and Exchange Commission with regard to all
interpretations of, and the enforcement of, applicable Federal
securities laws relating to the activities, conduct, and operations of
registered brokers, dealers, investment advisers, and investment
“(B) the relevant state securities authorities with regard to
all interpretations of, and the enforcement of, applicable state
securities laws relating to the activities, conduct, and operations or
registered brokers, dealers, and investment advisers; and
“(C) the relevant State insurance authorities with regard to all
interpretations of, and the enforcement of, applicable State insurance
laws relating to the activities, conduct, and operations of insurance
companies and insurance agents.”.
* * *
June 2, 1998