September 25, 2018
NASAA Annual Meeting
Anchorage, Alaska

Thank you Joe for your kind introduction and thank you for all you have done for me this past year and for NASAA the last 24 years.

It is an honor to be entrusted by my fellow administrators to lead NASAA into its second century of service. It so happens that I am the second Vermonter to hold this title. 88 years ago, Vermonter R.C. Clark took the gavel at NASAA’s annual meeting in Washington, D.C. Coincidentally, just down the road, Vermonter Calvin Coolidge occupied the White House – a fact that should give Bernie Sanders some encouragement.

As the second Vermonter to have the privilege to lead our organization, I cannot help but reflect on our state’s motto “Freedom and Unity.” The Vermont motto balances two seemingly opposite ideals: the freedom and independence of the individual, with the collective, common good of the larger community. These are the very principles NASAA has grappled with every day of our existence and will continue to grapple with during our next century.

To effectively serve our constituents we must embrace this duality – remembering to take our mission seriously, but to never take our disagreements personally.

I would like to thank those whose incredible efforts made NASAA’s 100th conference the best one yet:

Thank you to our conference chair Bill Beatty and our Alaskan hosts for their efforts and hospitality; to Andrea Seidt, Melanie Lubin, and Claire McHenry and their panelists for rich and timely discussions; to Peter Van Valkenburgh for a fascinating keynote address; and to Joey Brady and NASAA’s Corporate Office all your work organizing this conference and your tireless efforts supporting our members.

I would like to introduce leadership team that will lead NASAA into its second century. I’d first like to introduce NASAA’s 2018-2019 Board of Directors:

  • President-elect Frank Borger-Gilligan of Tennessee,
  • Past-President Joe Borg of Alabama,
  • Treasurer Tom Cotter of Alberta,
  • Secretary Pam Epting of Florida,
  • Travis Iles of Texas,
  • Bryan Lantagne of Massachusetts,
  • Melanie Lubin of Maryland, and
  • Tanya Solov of Illinois.

Subject to Board approval, I’d like to introduce NASAA’s 2018-2019 Section Chairs:

  • Broker-Dealer Section Chair Leslie Van Buskirk of Wisconsin,
  • Corporation Finance Section Chair Bill Beatty of Washington,
  • Enforcement Section Chair Christopher Gerold of New Jersey;
  • Investment Advisor Chair Andrea Seidt of Ohio; and
  • Investor Education Chair Lynne Egan of Montana.

I am very fortunate to have this talented and dedicated team and I look forward to all we will accomplish together. Please join me in a round of applause for the entire NASAA leadership team.

Speaking of great teams, I am pleased to be joined today by my Deputy Commissioner Bill Carrigan – who is accompanied by his lovely wife Mary Ann. Thank you Bill for your dedication to the people of Vermont and your valued support to me these last five years. A big thank you to the entire team at the Vermont Department of Financial Regulation and to Vermont Governor Phil Scott. The strength of our team and the support I receive back home is what allows me to be here today.

This year we will be reflecting and celebrating NASAA’s first 100 years of service. Although it is impossible to predict the future, our first century has taught us that change is the only certainty and that change happens fast. For NASAA that has meant evolving from a loosely organized group of administrators to today’s 22-person staff headquartered in Washington, D.C., with more than 400 volunteers from member agencies throughout North America.

Change has meant establishing new technologies to promote uniformity, efficiency and oversight. First launching the Central Registration Depository with FINRA in 1980 to consolidate a multiple paper-based licensing process into a single database. The Investment Adviser Registration Depository soon followed, sponsored by NASAA and the SEC, to provide a similar registration and licensing database for investment advisers and their representatives. Then a little less than three years ago, NASAA launched the Electronic Filing Depository that has modernized and streamlined the process for the filing of Form D, Rule 506 offerings with state securities regulators. Today, 47 U.S. jurisdictions are using EFD and have processed nearly 200,000 notice filings. These vital systems enable our members to better serve as market gatekeepers, screening out bad actors before they can strike and strengthening investor protection through increased transparency.

Change has meant being there to help investors as investments and securities markets grew more complex. NASAA pioneered an international initiative to educate investors, which continues today. First, through a series of Investor Bulletins and more recently through new mediums such as the Serve Our Seniors website, increased use of webcasts and a NASAA podcast series soon to be launched. It meant establishing an investor hotline in 1987 when the stock market crashed. In just three days, John Lynch and his small team answered more than 1,300 calls from worried investors. As John noted to USA Today, “The calls that really hurt are older retired folks who have given their full faith to their broker.”

Change has meant better coordination on multi-jurisdictional enforcement actions to investigate and eradicate systemic failures. First, cracking down on fraudulent microcaps stocks and their boiler-room salesmen who sought to capitalize on dot-com mania. Later helping to secure a $1.4 billion global settlement between state and federal regulators with the 10 largest investment banking firms for conflicts with their clients. Five years later, investigations by a NASAA multijurisdictional task force, prompted settlements calling for Wall Street firms to repurchase more than $61 billion in auction rate securities from investors for misleading, the largest return of funds to investors in history. And just this year, Operation Cryptosweep, which to date has led to more than 200 investigations and nearly 50 enforcement actions related to initial coin offerings and crypto-based investment products.

These examples demonstrate that today, NASAA is truly an international organization delivering a strong regulatory structure to assist our members to fulfill our mission of protecting investors and promoting capital formation.

While we enjoy and celebrate our NASAA milestone – we must remember that ten short years ago this month – the Lehman Brothers collapse served as the bellwether to the worldwide financial crisis. Although we have largely rebounded, the financial devastation of 2008 remains fresh in the minds of many every-day hard-working investors. We must never lose sight of the policies and decisions that lead the economy astray and vehemently push back on them when their day come again.

It is clear that NASAA has much to celebrate from its past, yet our mission calls us all of us to redouble our efforts to focus on the future.

Last month, I surveyed the NASAA membership for your views on the most pressing matters facing state regulators in the years ahead.

Preservation of state authority stood head and shoulders above all others as the top priority for our members. With broad preemption legislation in recent decades, and renewed threats in recent months, this priority is well placed.

Where appropriate, modernizing our association and promoting uniformity are the most effective ways for us to fight preemption and preserve our authority. However, determining the most effective strategies in promoting uniformity and where and how to modernize will take considerable thought, time, collaboration and discussion.

It is why I asked the board to establish a new Strategic Planning Committee tasked with reviewing our bylaws, committee structure, policies and procedures and engaging our membership in order to develop a strategic plan to help guide NASAA into its next 100 years.

Promoting uniformity will also require strengthening relationships between our members and their local decision makers. It is why I asked our board to establish a legislative and governmental official program to be held during our annual public policy conference in D.C. This program will allow our members to invite key legislators to learn about the history, on-going work and importance of state securities regulations and NASAA. By better understanding NASAA’s vital investor protection role and our important work – members will develop local advocates for model laws and regulations. Ultimately, these stronger relationships will help state-based regulation and promote uniformity.

Last, we must continue to engage our federal regulatory counterparts and seeks ways to improve our relationships on Capitol Hill.

Surveying the financial services landscape – it is clear that the issues we have been engaged on – cybersecurity, financial technology and senior financial fraud – should remain primary concerns.

In 2017, it is estimated that cybercriminals cost the world economy over $600 billion dollars. More alarming, financial services firms are 300 times more likely to be targeted than traditional American companies.

Further, last year 61 percent of cyber victims were smaller businesses. Smaller companies are the low hanging fruit for cybercriminals often lacking dedicated IT professionals, robust network defenses and mistakenly assuming they are too small to be targeted.

Couple this with the fact that 78 percent of our nearly 18,000 state registered investment advisers are 1 to 2 person shops and it is clear how important of an issue cybersecurity is for our regulated industry.

NASAA has made great strides on cybersecurity and more work is in store for the year ahead:

Last year NASAA published a helpful Cybersecurity Checklist for Investment Advisers that provides guidance on how to better protect their firms and clients;

Next month on October 15, NASAA will hold its second Cybersecurity Roundtable in Washington, D.C. designed to provide expertise and education to our regulated community; and now, we must consider whether to adopt a model rule to provide more direction to advisers and baseline protection to investors. I am happy the Investment Adviser Section published a model rule for public comment that would require investment advisers to adopt policies and procedures regarding information security and to deliver its privacy policy annually to clients. Public comments are open until November 26th and I encourage you to review and provide feedback on this important topics.

Financial technology continues to innovate how financial services firms operate and by extension has and will continue to change how we regulate them. This year we will continue to focus on the bad actors in the cryptocurrency space who attempt to cash in on the confusion and hype surrounding ICOs, tokens and cryptos. While simultaneously looking develop policy and guidance in the fintech space to allow the legitimate actors to innovate which protecting the Main Street investor.

Being from the second oldest state in the country – senior financial exploitation is an issue that hits close to home. NASAA’s leadership on this issue has been exceptional, thanks in large part to the tremendous work of Judy Shaw. I look forward to continuing our efforts during the up coming year.

I am proud that Vermont was among the first to adopt NASAA’s Model Act to Protect Vulnerable Adults From Financial Exploitation and I am happy to report 19 jurisdictions in total have done the same. I will make it a priority to increase the number of jurisdictions with this important investor protection law on the books.

I will also prioritize implementation of the Senior Safe Act by emphasizing collaboration with FINRA and the SEC to develop appropriate training to ease the barrier for firms looking to take full advantage of this legislation.

While it is important to remain focused on our older generations, we must not neglect the newer generations that are reshaping our economy, workplaces and communities.

As NASAA’s first millennial president, I take no offense to our membership survey ranking millennial issues as lower priority.

I know what people say about us. That we’re easily distracted by technology. We’re job hoppers. We want a trophy for just showing up. But we’re also known as being confident, optimistic, hard-working, street-smart multitaskers who prefer structure and are prone to collaborative problem-solving. That sounds a lot like the values that have shaped our organization these last 100 years.

Labels aside, I believe it is important to focus on millennial investor education, awareness and protection. Millennials are either just coming of age or are starting to get serious about building wealth for their financial futures, however, many are straddled with crippling student loan debt and ill equipped with the financial literacy tools necessary to build their future.

I have asked NASAA’s Investor Education Section to expand its ongoing generational outreach initiatives to include resources specifically designed for this younger generation.

I would like to leave you with one final message – I will need your help. I believe the opportunities that lie ahead are far greater than our challenges and that NASAA’s best days will be achieved during our second century. But I will need your advice and encouragement and our organization will need your expertise and engagement.

Please reach out to me with your ideas, opinions and concerns and look for opportunities get engaged in ways large and small to advance our organization and our mission.

With the principals of “Freedom and Unity” as my guide, I look forward to working with all of you to build upon our legacy of investor protection. Thank you.

Skip to content