NEW YORK - Building on its success last year of meeting with NASD, the Financial Services Institute Inc. this year plans to target state securities regulators.
The FSI, the Atlanta-based trade group for independent-contractor broker-dealers and their affiliated registered representatives, looks to do a full-court press on securities regulators to continue pleading its constituents' case.
Since its inception two years ago, the FSI has worked with regulators such as incoming NASD chairman and chief executive Mary Schapiro to help make them better informed about the independent-contractor business model and how some recent and proposed changes in securities regulation could be a burden to doing business.
Investigative sweeps of broker-dealers by some state regulators "appear to be fishing expeditions," said Dale Brown, the FSI's executive director and chief executive. "States are mimicking federal regulators" at the Securities and Exchange Commission and NASD, the brokerage industry's Washington-based self-regulatory organization, he said.
Bob Webster, a spokesman for the North American Securities Administrators Association Inc. of Washington, said, "We'd welcome an opportunity to discuss issues of common interest with FSI leadership; we'd like to hear from them."
The challenge of dealing with state regulators is their variety, one industry observer said.
"Sometimes it's very difficult to engage the states, because different commissioners have different perspectives on different issues," said David Spinar, chief compliance officer with Securities America Inc. of Omaha, Neb. The effort makes sense, particularly after the FSI's efforts to establish connections with NASD and the SEC.
Another factor is that states have both securities and insurance commissioners to regulate the sale of financial services products.
Many independent-contractor firms are owned by insurance companies, and insurance products constitute a majority of some reps' sales. The FSI wants to "educate members on how to deal with state regulators on a proactive basis," Mr. Brown said.
Also, the trade group wants to have a better understanding of the more challenging states when it comes to enforcement actions against broker-dealers, he said. From there, the FSI will pay closer attention to those specific states.
"You'll definitely see us engage more with leadership of NASAA," Mr. Brown said. The FSI is interested in participating in some way at NASAA's two meetings each year.