Regulators Deliver Remarks at NASAA and SEC's Section 19(d) Conference on Federal/State Cooperation
NASAA and the SEC held their annual NASAA/Section 19(d) Conference. Section 19(d) of the Securities Act authorizes and directs the SEC to coordinate and cooperate with state securities regulators. Investor Advocate Rick Fleming and SEC Commissioner Luis Aguilar discussed enhanced communication and collaboration between federal and state securities regulators.
Mr. Fleming advocated for "smart regulation," noting that it "provides a sufficient level of protection to bolster confidence without needlessly burdening the regulated entities" and can "spur innovation." Creating smart regulation, Mr. Fleming explained, requires coordination between the states and a willingness to give up individual preference to create consistent rules. He encouraged state regulators to "stay in the game and retain relevancy," and highlighted the integral role of protecting retail investors and promoting small businesses.
Commissioner Aguilar, who serves as the SEC's liaison to NASAA, focused his remarks on the ways in which the SEC and NASAA can work together to serve investors in two areas: (i) complex securities, including structured products, and (ii) Regulation A amendments ("Regulation A+") to the JOBS Act. Commissioner Aguilar stated that the fraud and abuse which surround "new products" – including subprime mortgage-backed securities offerings, disclosures in collateralized debt obligations and the sale of residential mortgage-backed securities – are "troubling." He stated that both SEC and NASAA members would benefit from greater collaboration in implementing the SEC's rules. Additionally, he noted that the experience and expertise of NASAA members could provide an important perspective that would benefit the SEC.
Commissioner Aguilar also stated that SEC and NASAA members could work closely together to implement Regulation A+. He explained that the amendments have created two tiers of issuances that provide a higher ceiling for the use of the Regulation A registration exemption. He encouraged regulators to consider the idea of allowing a NASAA representative to be ensconced in the SEC, which he noted has found a "receptive audience with Chair White." Specifically, Commissioner Aguilar explained that the state representative would be involved in the SEC staff's assessment of Regulation A+ offerings in an effort to bridge Tier 1 and Tier 2 offerings and provide the states with a "holistic view" of issuers using Regulation A+.