State securities regulators back Nevada's fiduciary rule proposal

State securities regulators back Nevada's fiduciary rule proposal
NASAA President Michael Pieciak: Draft regulations should curb abusive practices.
MAR 07, 2019

While an organization representing state securities regulators focuses on guiding the direction of the U.S. Securities and Exchange Commission's investment advice reform proposal, the group also is supporting a separate Nevada effort to raise advice standards. In a comment letter Thursday, the North American Securities Administrators Association Inc. said Nevada's proposal to impose a fiduciary duty on the state's brokers and other financial professionals would increase investor protection. "The draft regulations should curb abusive sales practices in Nevada," wrote Vermont Commissioner of Financial Regulation and NASAA President Michael Pieciak. "The [Nevada Securities] Division will likely receive objections to the draft regulations from the securities industry; however, we must remember the securities industry has proven itself adaptive and can accommodate these new regulations." Last week, several industry groups criticized the Nevada proposal, including the Securities Industry and Financial Markets Association, the Financial Services Institute and the Investment Adviser Association. Each of them said such a Nevada rule would be pre-empted by a federal securities law, the National Securities Markets Improvement Act of 1996. The IAA argued that the Nevada rule shouldn't apply to SEC-registered investment advisers. FSI said the Nevada measure would foist more record-keeping requirements on Nevada brokers. (More: Best interest standard must come with fiduciary teeth: Borzi) But NASAA said Nevada has the right to promulgate its own advice regulation. "The draft regulations are entirely consistent with the congressional intent in enacting NSMIA because states retain broad authority to regulate conduct standards," Mr. Pieciak wrote. Earlier this week in an event on Capitol Hill, Mr. Pieciak said NASAA would not draft a model fiduciary rule for states to consider. Instead, it is concentrating its efforts on helping to shape the SEC's proposal, which revolves around the so-called Regulation Best Interest to raise broker requirements above the current suitability standard. The SEC could release a final rule by this summer. In addition to Nevada, legislative and regulatory efforts are underway in New Jersey and Maryland to strengthen advice requirements to reduce conflicts of interest. "A lot of stakeholders at the local level want to protect investors, protect citizens in their states, and that's their prerogative," Mr. Pieciak said in Washington.

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