Executive Summary
To help Main Street investors and the nation recover from the recession and financial crisis, NASAA urges the 113th Congress to focus its oversight and legislative energies on efforts to promote sustained investor confidence in U.S. capital markets.
- To promote market accountability, Congress should pass legislation that would increase the civil monetary penalties the SEC may seek by linking the size of penalties to the amount of harm and investor losses, and establish a private right of action for aiding and abetting violations of the federal securities laws. In addition, Congress should enact legislation empowering states to provide investors with choices for dispute resolution, and increasing resources devoted to protecting older investors. NASAA further urges Congress to amend federal laws governing securities litigation to ensure that all investors, especially those investing small amounts, have a reasonable avenue to seek recovery.
- To promote greater transparency and systemic stability, and to reduce market volatility, NASAA urges Congress to enact legislation to increase information available to retail investors, including amendment of the Sarbanes-Oxley Act to make PCAOB disciplinary proceedings open to the public. NASAA encourages Congress to carefully investigate and scrutinize opaque market activities, including those of “dark pools,” hedge funds and high-frequency trading. In this regard, Congress should level the playing field among market participants to ensure that access to information by sophisticated and speculative investors does not unfairly disadvantage or harm retail investors.
- To ensure investor protection provisions of Dodd-Frank are implemented, NASAA opposes legislation that would impose excessive regulatory analytical requirements on independent federal agencies engaged in rulemaking. NASAA appreciates the importance of efficient regulation; however, unreasonable regulatory requirements may have the deleterious effect of weakening vital federal investor protections. Bills which mandate numerous new cost-benefit analyses, or which vest regulatory analytical authority over independent agency rules with the White House Office of Management and Budget, could fracture the SEC’s capacity to regulate securities markets and protect the investing public.
- To ensure all investors are protected when receiving individualized investment advice, NASAA opposes legislation that would authorize the SEC to designate an SRO for investment advisers. Rather than outsourcing responsibility for investment adviser oversight, Congress should provide the SEC with sufficient resources to examine all federally registered investment advisers. Accordingly, NASAA calls on Congress to enact legislation authorizing the SEC’s Office of Compliance Inspections and Examinations to collect user fees from the investment advisers it examines. NASAA further urges Congress and the SEC to expand the fiduciary standard of care currently applicable to investment advisers to broker-dealers who provide personalized investment advice.
- To provide the strongest protection for Main Street investors, NASAA urges Congress to refrain from any further preemption of state investor protection authority. Moreover, to ensure that “mom and pop” investors do not assume disproportionate investment risk, state securities regulators support policies that allow investors to invest in small businesses, including emerging businesses, provided they understand the risk involved and have the financial ability to absorb attendant losses.
