President\’s Report
Good afternoon NASAA colleagues. I just returned to Ohio from two NASAA-related events this past week – the NASAA Board of Directors summer meeting in the beautiful city of Vancouver, British Columbia, and the 2014 Enforcement Training Conference in St. Louis, Missouri. The NASAA Board, Section Committee Chairs, and Corporate Office leaders worked very hard on a number of business items in Vancouver, but there are at least three that I would like to highlight in this report.
The Board approved creation of a new Senior Issues Committee that will be exploring a potential model rule governing industry professionals’ handling and reporting of financial exploitation threats to senior investors as well as other issues impacting senior investors in the securities context. Montana Deputy Securities Commissioner Lynne Egan will chair the Committee with assistance from multiple members of the Board and representatives from each of NASAA’s operational sections. Advancing the interests of senior investors is a tremendously important initiative for NASAA that transcends the work of every section, but I am particularly grateful for the leadership of the Broker-Dealer Section – Bryan Lantagne (MA), Tanya Solov (IL), and Carolyn Mendelson (PA) – in pushing these issues forward. The Senior Issues Committee also will appoint a new Advisory Committee of industry, consumer, and academic experts to work with NASAA on these issues. If you have any thoughts regarding this new Committee, please reach out to Lynne.
The Corporate Office Review Committee (CORC) of the Board, which consists of the Presidential Officers and the Treasurer, delivered a report of its findings to the Board following three sessions with Executive Director Russ Iuculano and corporate office staff, including two on-site visits, earlier in the year. The CORC recognized the great achievements of the corporate office staff and identified areas of possible enhancement, including updates to technology, investment in staff training and professional development, a compensation review, and possible changes to general office management policy and procedures. Thanks to Russ and the corporate office team for their assistance in completing the review.
The Board devoted significant time to the issue of strategic planning and other items emanating from member discussion at the Spring Meeting of the Whole. Judy Shaw (ME) continued her leadership in this area, securing Board Approval to convene committees focusing on Communication, Strategic Planning, and Member Engagement. The Board also discussed the need to expand the tasks assigned to the existing Awards Committee to propose additional mechanisms for member recognition and to provide additional support to NASAA’s New Member Advocate. An update regarding these efforts will be provided at the Fall Conference; Judy and the Board greatly value your continued input on changes to improve and solidify the association’s future.
I would like to thank the Chair and Chief Executive Officer of the British Columbia Securities Commission, Brenda Leong, for assisting NASAA’s Event Coordinator Extraodinaire, Lonnie Martin, with planning for the Summer Board Meeting and for graciously joining the Board dinner on Friday night. Everyone enjoyed the great beauty and hospitality that British Columbia has to offer.
Turning now to the Enforcement Conference, I was once again wowed by all of the hard work and effort churned out by our members in preparing yet another premier training event. I only was able to participate in the first day of the conference, but was truly invigorated by the deep, thoughtful dialogue occurring in these sessions. If you have never attended the Enforcement Training or had occasion to hear South Carolina Assistant Deputy Attorney General Tracy Meyers belt out the Ten Commandments for state securities enforcement attorneys, you are really missing out. I\’ve asked Tracy to share her insightful script with me so that I can share it with my own Ohio Securities Division staff at our next monthly staff meeting. Many thanks to Diana Foley (NV), Enforcement Chair, all members of the Enforcement Section Committee, and the Enforcement Training Project Group Co-Chairs – Tracy Meyers (SC) and Jeffrey Spill (NH) – and all planners and speakers for their excellent work delivering the program.
This week’s quote comes courtesy of Charles Darwin who not surprisingly reflects on the importance of adaptation. Our securities markets in North America are dramatically changing before our very eyes. Your leadership at NASAA remains dedicated to successful management of these changes.
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
Charles Darwin
Contact: Andrea Seidt
Executive Director\’s Report
I want to bid a fond farewell to Rick Hancox, who earlier this week announced that he will be stepping down as the NASAA representative for New Brunswick, effective August 1. For the past 10 years, Rick has served NASAA with great distinction in a variety of important capacities. Not only has he served on our Board of Directors as Secretary, but he also chaired the Standardized Training & Technology Committee and served on both the International and Corporate Governance Committees. Rick’s words of wisdom and many contributions to NASAA Business Meeting and Committee discussions will be missed.
Kevin Hoyt, New Brunswick’s Executive Director of Securities, will assume the role as NASAA representative. Kevin also serves as Chair of NASAA’s International Committee. Please join me in welcoming Kevin to his new role. Both Rick and Kevin will be in attendance at the Fall Conference.
Contact: Russ Iuculano
Legal & Regulatory Affairs
NASAA Election. Please be sure to return your ballots for the NASAA Board elections. The completed election package must be received at the NASAA Corporate Office no later than close-of-business July 31, 2014. (See your election materials package, which you should have received on or about July 7, 2014 for details).
Comment Letters. This week, NASAA filed two comment letters regarding FINRA arbitration proposals. The first concerned a proposed rule change to amend the code of arbitration procedure for customer disputes and the code of arbitration procedure for industry disputes to increase arbitrator honoraria and increase certain arbitration fees, The second concerned a proposed rule change relating to revisions to the definitions of non-public arbitrator and public arbitrator.
Contact: Joseph Brady, Valerie Mirko, Chris Staley, Michael Bertkau, Faye Gordon
Government Affairs
IA Examination Improvement Act Gains 15 Cosponsors, including former House Financial Services Chair Bachus. H.R. 1627, the Investment Adviser Examination Improvement Act of 2013, has gained an additional 15 Cosponsors since July 11, including Republican Rep. Spencer Bachus (R-AL), the former House Financial Services Committee Chairman from 2011-2012. The legislation, which NASAA has actively supported since its introduction by House Financial Services Committee Ranking Member Maxine Waters (D-CA) in April 2013, would provide the SEC with the authority to impose and collect user fees on federally registered investment advisers in order to bolster its oversight program. Ranking Member Waters has formally requested to Chairman Jeb Hensarling (R-TX) that the Financial Services Committee hold a hearing to consider her bill and other legislative proposals that would increase the number of reviews of investment advisers. The momentum gained recently on the H.R. 1627 could spur the introduction of bipartisan companion legislation in the Senate.
House Passes FY 2015 Financial Services Appropriations Bill. On July 16, the House of Representatives passed the FY 2015 Financial Services and General Government Appropriations Act (H.R. 5016), by a vote of 228-195. The bill appropriates $1.4 billion to the SEC for FY 2015, $300 million less than requested by SEC Chair Mary Jo White. An amendment was also approved by voice vote to the bill that would prohibit the SEC from taking any action to promulgate a fiduciary duty for broker-dealers pursuant to its authorities under Section 913 of the Dodd-Frank Act. With Senate appropriations action stalled, it remains possibly that Congress could defer action on FY2015 appropriations bills, and enact a Continuing Resolution later this year, which would maintain the SEC’s current annual funding level of $1.35 billion.
SEC Adopts Money Market Fund Reform Rules. On Wednesday, the SEC voted 3-2 to adopt final amendments to the rules that govern the $2.6 trillion money market mutual fund industry. The amendments make structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds. In one important change, certain money market funds will have to report a floating net asset value instead of a fixed value of $1 a share. This change is meant to remind investors that the funds are not without risk and that their value can decline periodically. Only funds whose investors are institutions and that purchase corporate debt or municipal securities are covered while funds whose investors are individuals are not subject to the change. In addition, the SEC adopted rules that give funds the ability to stem investor redemptions during times of stress. Money market funds, in these situations, will be able to impose fees and delays that temporarily prevent investors from taking out their cash. A fact sheet explaining the new rules may be viewed here.
House Financial Services Subcommittee Holds Hearing With SEC Corporate Finance Division Director. On Thursday, the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing entitled “Oversight of the SEC’s Division of Corporation Finance”. The sole witness testifying at the hearing was Keith Higgins, Director of the SEC’s Division of Corporation Finance. The Division of Corporation Finance is responsible for completing rulemakings to implement the crowdfunding and Regulation A+ provisions of the JOBS Act; regularly monitoring and reviewing filings made under the Securities Act of 1933 and Securities Exchange Act of 1934 to ensure compliance with disclosure and accounting requirements; conducting a comprehensive review of the SEC’s rules governing public company disclosure; completing rulemakings to implement disclosure-related provisions of the Dodd-Frank Act; and conducting oversight of the proxy process, including the activities of proxy advisory firms. The hearing was sparsely attended, and the subject of the SEC’s proposed rules for implementing Title IV of the JOBS Act was scarcely mentioned. The Committee memorandum may be viewed here and an archived webcast of the hearing may be viewed here.
House Financial Services Committee Holds Dodd-Frank Hearing. The full House Financial Services Committee held a hearing on Wednesday entitled “Assessing the Impact of the Dodd-Frank Act Four Years Later.” The hearing was held in order to examine the effect of the Dodd-Frank Act on the financial services industry, consumers, and American competitiveness over the course of the past four years since its enactment, through a study both of specific provisions of the law and its cumulative impact on the economy. One of the five witnesses testifying was former House Financial Services Committee Chairman Barney Frank, who defended and reflected on the law that he co-authored. The Committee Memorandum may be viewed here and an archived webcast of the hearing may be viewed here.
Upcoming Congressional Hearings:
House:
Examining Allegations of Corruption at the Export-Import Bank; House Oversight Subcommittee on Economic Growth, Job Creation and Regulatory Affairs; Tuesday, July 29, 10am, 2154 Rayburn House Office Building
Oversight of the False Claims Act; House Judiciary Subcommittee on the Constitution and Civil Justice; Wednesday, July 30, 1pm, 2237 Rayburn House Office Building
Senate:
The Flood Insurance Claims Process in Communities After Sandy: Lessons Learned and Potential Improvements; Senate Banking Subcommittee on Housing, Transportation, and Community Development; Wednesday, July 30, 10am-12pm, 538 Dirksen Senate Office Building
Financial Products for Students: Issues and Challenges; Full Senate Banking Committee; Thursday, July 31, 10am-12pm, 538 Dirksen Senate Office Building
Examining the GAO Report on Expectations of Government Support for Bank Holding Companies; Senate Banking Subcommittee on Financial Institutions and Consumer Protection; Thursday, July 31, 2-4pm, 538 Dirksen Senate Office Building
Contacts: Michael Canning, Anya Coverman, Zachary Israel
Communications and Investor Education
Wall Street Journal. A reminder that the Wall Street Journal is preparing a major article examining state oversight of broker-dealers, with an emphasis on senior investor protection. Journal reporter Jean Eaglesham particularly wants to see examples of 2013 state enforcement actions against registered broker-dealers involving senior victims. NASAA is in the process of collecting relevant case examples. If you have examples showcasing your good work in this area, please send them to Bob Webster within the next two weeks.
Contact: Bob Webster
Member Services
CARFs. In anticipation of the 2014 Organizational Board Meeting, where committee and project group assignments are made, it is time to begin soliciting applications for the various 2014-2015 committees and project groups. Below, you will find the 2014-2015 Application for Section Committee and Project Group Membership. Please share this application with your staff and have those interested complete the application and return it to the NASAA Corporate Office. The current list of committees and project groups, along with the tasks for each, can be found on the members-only section of the NASAA website. We encourage you to include a second and third choice due to the possibility that some of the current committees and project groups could be discontinued next year.
Please be advised that if you want to apply for a specific position, such as Chair of a project group of committee, you must indicate that on your application. Also, to be reconsidered for the project group or committee you are currently serving on, you are still required to complete a new application for the 2014-2015 year. This includes Board level committees.
The deadline for submission of the 2014-2015 CARF is AUGUST 29, 2014.
Download: CARF 2014-2015.
Please submit applications to via mail to: NASAA, Attn: Kaprina Robinson, 750 First Street, NE, Ste. 1140, Washington, DC 20002, via email: kr@nasaa.org , or via fax: Attn: Kaprina Robinson 202-783-3571.
Contact: Kaprina Robinson
Conferences & Events
Outstanding & Distinguished Service Award Nominations. NASAA’s 2014 Awards Committee is seeking nominations for members who have exhibited outstanding or distinguished service in 2013-2014. The awards will be presented in September during our Annual Conference. If you have someone in mind to receive an award, please submit your nomination in writing to one of the committee members, along with a brief explanation of the reason. Please send your nominations by Monday, July 28 to any of the following committee members: Craig Goettsch (IA), Chair; Daphne Smith (TN); or Patricia Struck (WI).
Start Your Engines! NASAA Annual Conference. Registration is open for NASAA\’s 2014 Annual Conference in Indianapolis, Indiana, September 14-16. For details, click here. Be sure to book your hotel room early. The Indianapolis Colts will be playing the Philadelphia Eagles in a Monday Night Football game just blocks from our hotel. As a result, the hotel has advised us that early room bookings are highly recommended for conference attendees.
2014 NASAA Training Calendar. For 2014, the Board of Directors allocated to each jurisdiction five (5) general training vouchers; one (1) dedicated voucher for Advanced Litigation Training; and one (1) dedicated voucher for Franchise / Business Opportunity Training. Each member will have an opportunity to use their vouchers at the training events listed below. The 2014 trainings will be conducted in St. Louis, Missouri, and the Advance Litigation Training will be held in Hoover, Alabama.
NASAA Calendar of Events
Investment Adviser Training | August 11-13, St. Louis, Missouri
Annual Conference | September 14-16, Indianapolis, Indiana
Advanced Litigation Training | September 28-October 1, Hoover, Alabama
Corporation Finance Training | November 14-15, St. Louis, Missouri
Franchise & Business Opps. Training | November 14-15, St. Louis, Missouri
Contact: Lonnie Martin, Danielle North