NASAA Issues Federal Policy Agenda for 118th Congress
Commentary by Steven Lofchie
The North American Securities Administrators Association ("NASAA") outlined its legislative agenda for the 118th Congress.
In its 2023 Federal Policy Agenda, NASAA described "Core Principles for Pro-Investor Policymaking," which include:
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addressing "gaps" in the registration requirements for firms, products and investment professionals;
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ensuring investors receive fair treatment and all the necessary information to make an informed investment decision to rebuild trust among investors;
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making clear that "securities laws apply to most tokens and digital assets";
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promoting coordination between state and federal securities regulators; and
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stopping any legislation that limits the authority of either state or federal regulators.
Additionally, NASAA provided a list of priority requests for Congress, including:
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preserving states' authority to (i) register smaller offerings, particularly those under $500,000, (ii) require notification (to the states) of certain securities transactions and (iii) hold bad actors accountable. NASAA also asked Congress to require federal regulators to establish a bad actor registry that state and local governments can utilize;
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funding an SEC study on public and private markets including considering the appropriate definition of "accredited investor";
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preserving state authority to register and regulate "finders";
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banning the use of mandatory arbitration agreements by broker-dealers and finders;
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imposing more disclosure requirements on larger private companies and increasing coordination between the SEC Office of the Advocate for Small Business Capital Formation and state securities regulators; and
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allowing states to become members of the Financial Literacy Education Commission and strengthening the SEC Office of Investor Education and Advocacy's efforts to educate investors.
Commentary
NASAA's interests are primarily focused on more regulation and enforcement. In general, the association appears unconcerned with facilitating business activity or reducing regulatory burdens. One item in NASAA's 2023 Federal Policy agenda with the appearance of being deregulatory is its support for the "Promoting Opportunities for Non-Traditional Capital Formation Act." The bill would require the SEC to "host events" for small businesses and rural businesses, and "meet with representatives of State securities commissions to discuss opportunities for collaboration." In short, it's just a bill to direct government regulators to spend money and have meetings.
It may be difficult for state securities regulators to make rules that would support growing businesses in a national economy. That said, there are ways to enable NASAA and state securities regulators to do so, perhaps by giving them exemptive authority from the federal securities laws within their states or within their regions of the country. For example, one might imagine an exemption from the Investment Company Act that would be available to investors within a state/region where the investments would be made within that state/region.