The North American Securities Administration ("NASAA") offered a legislative agenda for the 116th Congress.
According to NASAA, Congress should:
- support "enhanced standards of conduct for broker-dealers";
- "encourage, monitor, and responsibly regulate financial innovation" (NASAA stated it would discourage so-called regulatory "sandboxes," and call for "rigorous oversight" of cryptocurrency and ICOs);
- "address intergenerational investor issues" (including addressing senior financial exploitation and providing investor education for millennials);
- "maintain enforcement independence of state securities regulators";
- "protect regulatory remedies" (including the elimination of the five-year statute of limitations applicable to disgorgement actions);
- "ensure oversight of private placement brokers and finders";
- "provide state security regulators access to filings of Suspicious Activity Reports";
- "prevent and deter fraud through effective penalties";
- "examine public and private offering regimes" (including, e.g., consideration of the impact of the JOBS Act, and whether it unduly expanded the definition of a private offering);
- "enact responsible policies to encourage small business capital formation" (including, e.g., providing an exemption for M&A brokers from federal regulation and coordinating state and federal offering exemptions);
- "modernize the accredited investor definition" (including, at a minimum, adjusting it upwards for fraud);
- "reduce fraud and improve transparency in the private markets" (including, e.g., mandating the filing of a Form D in many private offerings and imposing substantial penalties for failure to file);
- "secure investor choice and transparency in dispute resolution" (including, e.g., limiting mandatory arbitration and not permitting mandatory arbitration in initial public offerings);
- "make harmed investors whole" (including ensuring that broker-dealers pay arbitration awards entered against them);
- "safeguard shareholder rights" (by imposing limitations on "dual-class shares" and increasing oversight of proxy advisers); and
- protect "data security and privacy" through additional cybersecurity legislation and regulation.
Commentary / Steven Lofchie
Every year, the vast majority of NASAA's proposals relate to the strengthening of enforcement mechanisms. By contrast a relatively small percentage relate to measures that might, for example, encourage capital formation within a state. Is that because state securities laws are not tough enough? Or is it because the natural inclination of securities regulators is to focus on enforcement rather than economic growth?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.