From the Regulators

State regulators lobby for establishing a fiduciary duty standard

By James Langton |

The North American Securities Administrators Association (NASAA) is putting retail investors, and seniors in particular, at the top of its legislative agenda for the current edition of the U.S. Congress.

The recommendations to Congress, which were announced on Friday, include establishing a fiduciary standard for broker-dealers.

"All financial services professionals should act in the best interests of clients. Establishing a fiduciary duty standard governing the conduct of broker-dealers and their agents is crucial for the protection of investors and to enhance investor confidence in the securities markets," NASAA says in a statement.

NASAA's priorities stress the importance of laws to prevent the financial exploitation of seniors by enacting legislation designed to help financial industry professionals to identify possible exploitation, and report it to regulators and law enforcement. They also call for a federal grant program to support state efforts to protect vulnerable older investors, and ask that the Government Accountability Office (GAO) study the economic cost of the financial exploitation of seniors.

The priorities also call on Congress to: preserve investor protections that have been enacted in response to the financial crisis; enhance collaboration between regulators by requiring at least one federal commissioner to have experience serving as a state regulator and to encourage information sharing between state and federal regulators; and prioritize retail investor protection in developing any policies that would expand private securities markets.

"Preserving the integrity of our nation's financial markets through a responsible regulatory framework that ensures the rules are enforced, encourages financial innovation, and provides essential protections for investors is an integral responsibility of government at both the federal and state levels," says Mike Rothman, president of NASAA and Minnesota Commissioner of Commerce, in a statement.

"We encourage Congress and the Administration to promote financial regulatory policies that hold true to our shared responsibility to look out for investors and preserve the integrity of our capital markets," he adds.