Wall Street Scuffles With the States
A push by the Securities Industry Association to streamline the regulation of stockbrokers is running into opposition from state regulators. The scuffling started in late April, when Senate Banking, Housing, and Urban Affairs Committee Chairman Phil Gramm, R-Texas, asked various groups to recommend changes that they would like to see in his upcoming securities bill. The SIA—Wall Street’s top trade association—responded with a proposal to federalize the state-by-state regulatory system for brokers. ”We really feel a national market should have a national regulatory system,” said SIA spokesman Dan Michaelis. ”There’s a great duplication of effort with state regulators. Imagine if you needed a driver’s license from every state you passed through. That’s the kind of redundancy we’re talking about.”
The North American Securities Administrators Association Inc., a 65-member group that includes regulators from the 50 states, is fighting the SIA proposal. ”If enacted, this proposal would be fundamentally anti-investor,” warned NASAA spokesman Marc Beauchamp. The NASAA has argued that the combination of industry self-policing and monitoring by state and federal officials has worked well. If the SIA recommendation is made part of the Gramm securities bill, Beauchamp added, the states’ role in protecting investors would be lost. The NASAA styles its confrontation with the SIA as a classic David-vs.-Goliath matchup. The SIA spent roughly $ 2.4 million on lobbying during the last six months of 1998, while the NASAA spent approximately $10,000 over the same period. The NASAA has recently retained Columbus, Ohio-based lobbyist Thomas F. Needles, who worked in the Bush White House and was director of the state of Ohio’s Washington office.
Meanwhile, the SIA is also battling the mutual fund industry, over another item in the Gramm-inspired wish list. In April, Investment Company Institute President Matthew P. Fink wrote SIA President Marc E. Lackritz to complain about an SIA- backed provision that would loosen the rules governing securities firms’ own mutual funds. ICI spokesman Jim Collins said the change would weaken investor protections against fraud.
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