The North American Securities Administrators Association testified to a House committee this week, laying out its legislative recommendations and urging representatives to steer clear of proposals that would weaken existing securities laws under the guise of the current coronavirus crisis.
In his testimony, NASAA President Christopher Gerold called on Congress to increase transparency in the private markets, put a “pause” on major SEC rulemakings so that the agency can focus on COVID-19 and expand disclosures by public companies.
In its legislative recommendations, NASAA said Congress should focus on reducing and eliminating unpaid arbitration awards, a problem that will likely be exacerbated in the months ahead, according to the organization. In 2018, FINRA published a list of firms and advisors responsible for unpaid arbitration awards. FINRA also proposed a rule, which it has not yet approved, that addresses this issue.
NASAA also recommended the creation of a nationwide investor restitution fund to help victims of investment fraud.
“In many cases, the victims of these investment scams are senior citizens who don't have as much time and resources to recover from losses as do younger victims. The establishment of a restitution fund to help qualifying investors recover a portion of their losses is a common-sense tool that can provide critical assistance to harmed investors, while also contributing to investor confidence broadly,” NASAA said.
The group also urged Congress to authorize disgorgement claims brought by the SEC. In 2017, the Supreme Court decided on a case that found that disgorgement rulings were subject to a five-year statute of limitations. And now, the Supreme Court is considering a case that could potentially limit whether the SEC can pursue disgorgement against defendants, including investment advisors, in federal court.
