Corporate & Securities Law

By Jim Hamilton

The North American Securities Administrators Association (NASAA) has sent a letter today to each member of the U.S. Senate, urging the lawmakers to support the Reed-Specter Amendment to the Restoring American Financial Stability Act of 2010 (S. 3217). Writing on behalf of NASAA, Texas Securities Administrator and NASAA President Denise Voigt Crawford described the amendment, which would reimpose private civil liability on aiders and abettors of securities fraud, as a "positive step" for investors. According to Crawford, the amendment would foster greater accountability and integrity in the nation's capital markets by restoring to investors the ability to seek damages from all entities that knowingly and substantially participate in securities fraud.

Among its other recommendations, NASAA continued to urge the Senate to support the Akaka-Menendez "Honest Broker" amendment to Section 913 of the bill. The amendment would replace the study in Section 913 with House-passed language that directs the U.S. Securities and Exchange Commission to conduct rulemaking that would require stockbrokers giving investment advice to act in their clients' best interest. NASAA also reiterated its call for the adoption of disqualification provisions to prevent violators of the securities laws from conducting private offerings of securities under Rule 506 of Regulation D, while recommending that the Senate increase the monetary standards required for the "accredited investors" who may participate in such offerings.

Finally, NASAA called for state banking, insurance and securities regulators to have seats at the table as members of the Financial Stability Oversight Council that would be established under Section 111 of the bill. Crawford stated that the presence of state regulators would foster federal-state regulatory cooperation and communication. NASAA also believes that the inclusion of state regulators would result in more effective oversight of systemic risk by creating a body with access to all the critical information regarding the accumulation of risks in the financial system.

Full post as published by Jim Hamilton's World of Securities Regulation on April 27, 2010 (boomark / email).