NASAA Insight: Compliance Issues; JOBS Act and Federal Preemption (with Lofchie Comment)
NASAA announced the publication of its quarterly newsletter, NASAA Insight. The contents of the current newsletter, designed to keep readers informed of recent NASAA activities, are as follows:
- A. Heath Abshure of Arkansas Takes NASAA Helm
- NASAA Urges Caution as SEC Mulls over Solicitation Rule [i.e., the JOBS ACT]
- Broker-Dealer Compliance
- Native American Outreach
- Top Investor Traps
- Protecting Senior Investors
- NASAA on JOBS Act Implementation
- Abshure: NASAA to Add Offense to Defense [about preemption and the role of state regulation]
- Photo Gallery: NASAA Conference Focuses on Innovation, Investors
- President's Message
- Executive Director's Message
In the broker-dealer compliance section of the newsletter, the following were identified as the most common problem areas found by state examiners in their examinations: (i) books and records, (ii) supervision, (iii) sales practices, (iv) registration and licensing, and (v) operations. The top five types of violations found involved: (i) failure to follow written supervisory policies and procedures, (ii) suitability, (iii) correspondence/e-mail, (iv) maintenance of customer account information, and (v) internal audits. Two-thirds of the relevant inspections involved either home or one-person offices.
Lofchie Comment: The most notable aspect of the comments in the NASAA journal related to the tension between the federal and state governments. The most obvious aspect of this consisted of cautionary remarks about the JOBS Act and the deregulation of private offerings, to which NASAA has been consistently opposed. But much more interesting was the piece on "playing offense," which generally refers to the concept of increasing state authority to regulate securities firms. In this regard, NASAA President Abshure urged the states to do more to show that they were good regulators by, among other things, working more on the development of uniform laws (which would clearly be a benefit to any regulated entity). The most surprising aspect of his remarks, to me, was his opposition to the idea of a self-regulatory organization for investment advisers, which he viewed as a step toward federal preemption of the regulation of investment advisers. (Without expressing any policy view as to whether such an SRO would be good or bad (albeit good for me as a regulatory lawyer!), I can say it would not have occurred to me to view the proposal in that light, as part of the battle for power between the federal and the state governments. So his was a different perspective on that subject.
View newsletter here (links externally to NASAA website).