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Tuesday, November 13, 2018

Who is Your Regulator - Operating in a multi-jurisdictional climate

By David McNeal, Contributor of My Compliance Blog

By Cory Roberson, Principal of FIN Compliance and FIN Community

November 10, 2018.  In the U.S., the securities industry features a myriad of regulatory bodies. The purpose of this articles is to help you realize which state, federal, and self-regulated organizations regulate your area in the securities industry.

State and Provincial Securities Regulators

Starting with the passage of the first “blue sky” law in Kansas in 1911, state and provincial securities regulations geared its legislation to protect investors from fraud over the last 100 years.  Eight years later, a small group of state securities regulators organized a network of colleagues who worked together to protect investors throughout North America.

The North American Securities Administrators Association (NASAA)

Founded in 1919 in Kansas, The North American Securities Administrators Association is the oldest international investor protection organization to include all other organized securities regulators, including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

As the preeminent voice of state and provincial securities regulators in the United States, NASAA is responsible for educating and protecting investors from fraud and abuse, supporting capital formation, and helping ensure the integrity and efficiency of financial markets., covering all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.

Securities & Exchange Commission (SEC)

The U.S. Securities and Exchange Commission is a federal congressional agency responsible for enforcing state securities laws and regulating the securities industry, national stock and options exchanges, and other electronic securities markets.

The Securities Exchange Act (SEA)

The SEC was created with the passing of The Securities Exchange Act of 1934 (SEA) to regulate post-issuance securities transactions in the secondary market to ensure greater financial transparency and accuracy and less fraud or manipulation

The Securities Act of 1933:

The SEC is responsible for investigating and enforcing The Securities Act of 1933, which requires that securities offered or sold to the public in the U.S. must be registered by filing a registration statement with the SEC. A prospectus is generally filed along with the registration statement.

The main objectives of the Securities Act of 1933 is:

to require that investors receive significant (or “material”) information concerning securities being offered for public sale;

to prohibit deceit, misrepresentations, and other fraud in the sale of securities to the public.


Regulation A offerings (JOBS Act Title IV; known as Regulation A+), which are offered to non-accredited and accredited investors alike.

Regulation D offerings (506(c)), which are offered only to accredited investors.

Regulation Crowdfunding offerings (JOBS Act Title III), which are offered to non-accredited and accredited investors alike.

Other Acts governed by the SEC:

Investment Advisor Acts of 1940 - regulation of advisors

Securities Exchange Act of 1934 - regulation of exchanges

Investment Company Act of 1940 - regulation of funds, fund exemptions

State Uniform Securities Act (NASAA) – regulation of advisors, broker-dealers, other
financial intermediaries

State Uniform Securities Act (State Blue Sky Laws) - registration of securities (in-state)

US Treasury Financial Crimes Network (FinCEN)

Established in 1990, The Financial Crimes Enforcement Network is an office of the US Treasury Department. As the financial-intelligence gathering arm of the U.S. Treasury, FinCEN collects and analyzes information about financial transactions to combat domestic and international money laundering. FinCEN is delegated the admin of the BSA (Bank Secrecy Act).

Under the Bank Secrecy Act FinCEN requires that financial institutions address the following elements in all of their AML programs:

Title I - contains provisions requiring financial institutions, securities broker dealers, etc. to maintain detailed records of customer transactions and accounts.

Title II - demands that financial institutions, and sometimes individuals, report certain transactions to the government.

Self-Regulatory Organization (SRO)

As the term suggests, a Self-Regulatory Organization regulates itself. It also has some regulatory impact on an industry or profession, often achieved through internal mechanisms that control the flow of business, or through an external agreement between similar entities. An outstanding example of an SRO is the Financial Industry Regulatory Authority.

Financial Industry Regulatory Authority (FINRA)

On July 30, 2007, the Financial Regulatory Authority was established with the approval of the SEC. FINRA became by far the largest non-governmental regulatory organization for securities brokers and traders in the United States.

FINRA can license securities dealers. This includes the ability to audit dealers and affiliates and ensure compliance with regulatory standards. The aim is to promote ethical practices and improve transparency within the sector. FINRA also oversees arbitration between investors, brokers and other parties involved. This provides a standard for handling various disputes, but also limits the actions a company can take outside the system. When arbitration is mandatory, it is typically referred to as binding arbitration.

Commodity Futures Trading Commission (CFTC)

The Commodity Futures Trading Commission is an independent U.S. federal agency established by the Commodity Futures Trading Commission Act of 1974. The CFTC regulates the markets for commodity futures and options.

The Commodity Exchange Act (CEA) regulates trading in commodity futures in the United States. The CEA was adopted in 1936 and has been amended several times since then. It defines the legal framework under which the CFTC operates. This Act empowers the CFTC to adopt rules published in Chapter I of Title 17 of the Code of Federal Regulations (CFR).

Federal Trade Commission (FTC)

The Federal Trade Commission was established on September 26, 1914, when President Woodrow Wilson enacted the Federal Trade Commission Act. The FTC protects consumers by preventing unfair, fraudulent or fraudulent practices on the market.

They investigate and sue violators, develop rules to ensure a vibrant market, and inform consumers and businesses of their rights and obligations. By enforcing antitrust law, the FTC helps to ensure that our markets are open and free. The FTC challenges anti-competitive mergers and business practices that could harm consumers by leading to higher prices, lower quality, less choice or lower rates of innovation.

Municipal Securities Rulemaking Board (MSRB)

The U.S. Congress created the Municipal Securities Rulemaking Board in 1975. It was given the assignment of creating rules and policies that would help prevent fraud and misleading acts in the securities industry. The MSRB regulates the issuing and sale of municipal bonds, notes, and other municipal securities.

One of its first accomplishments was creating a set of uniform standards dictating fair practices that municipal securities dealers should follow. The organization was also instrumental in paving the way for a smooth transition from traditional paper bonds to electronic versions in the 1980s. 


In today's rapidly changing financial marketplace, registered investment advisors need to fully understand their regulatory environment to successfully evaluate opportunities for operators and investors, and to respond quickly to the evolving and complex regulatory landscape. Public and private companies and investors must navigate a much more complex market with a heightened level of scrutiny. It’s more important than ever to provide first-class guidance in meeting the challenges and opportunities these areas present.

Compliance and Business Management

FIN Compliance ( is a consortium of compliance services including: RIA Consults-Roberson Consults Group, a compliance consulting firm, RIA Review, a compliance-management software tool (SaaS), B-D Review, a RIA/Broker-Dealer compliance management software tool, and FINLancer is a business management portal featuring:  E-signature tools; Invoicing integration, Vendor Directory, continuity directory*, business client document portal, and more (available by Q3 2019).  Access all services on one site:


FIN Missions ( provides business support group sessions for other entrepreneurs.  In addition, Cory has volunteered for more than fifteen youth programs in locations such as like S. Korea, China, S. Africa, Thailand, and India.

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