Denise Voigt Crawford is fighting the war for the states.
As president of the North American Securities Administrators Association Inc., she is determined that Congress maintain — and in fact expand — the states' role in regulating the financial services industry.
It's an extensive agenda — the state securities cops want a fiduciary duty imposed on all brokers and advisers, more state control over advisers, an end to mandatory arbitration and a state role for any systemic-risk regulator.
Ms. Crawford's greatest concern is that if Congress extends federal regulatory powers, enforcement will suffer. While overregulation can be harmful, “deregulation has swung so far that it could cause capitalism to destroy itself,” said Ms. Crawford, who is also Texas securities commissioner.
NASAA has scored some early points. The Investor Protection Act pending in the House and the draft legislation in the Senate Banking Committee would give states authority over more advisory firms by raising the asset threshold for state oversight to $100 million, from $25 million.
However, the bill going to the full House would authorize the Securities and Exchange Commission to write rules establishing the terms of fiduciary duty. NASAA, however, argues that the House bill would weaken the standard and instead supports a Senate draft that would put all brokers and advisers under the fiduciary rules defined under the Investment Advisers Act of 1940 — a level states think would be more stringent.
Ms. Crawford hasn't been shy about bashing the feds — or the
Financial Industry Regulatory Authority Inc.
She testified against a provision in the House bill that would give Finra authority over dually registered advisers.
“[Self-regulatory organizations] are inherently conflicted and are not independent,” she wrote in a letter to the House Financial Services Committee.
“It's important that regulation be done by government,” Ms. Crawford said in an interview. “SROs are accountable to their members rather than the public.”
Opponents of turning over more authority to state regulators wonder how cash-strapped states will handle more of the workload, especially if they're given thousands more advisers to watch.
Ms. Crawford said states can maintain more-frequent exam cycles than the SEC, even if the latter is given more resources.
“It's healthy for there to be different types of regulators, multiple regulators,” she said, “because you're likely to get a better result.”
To be sure, NASAA is picking some political fights, but Ms. Crawford “has credibility with both political parties,” said Barbara Roper, director of investor protection for the Consumer Federation of America.”
“She never comes across as mean, but she is tough,” Ms. Roper said.
