NASAA Approves Amendments For Two Model Rules

The North American Securities Administrators Association (NASAA) announced significant amendments to two of its Model Rules in May of this year. The amendments are designed to align the NASAA’s rules with federal law and ease regulatory burdens. These changes were adopted during a membership meeting and reflect the evolving world of federal and state regulatory activities.

Key Points:

• NASAA amended the Model Rule Exempting Certain Merger & Acquisition Brokers (M&A Broker Rule) to align with federal law.
  

• The Model Rule: Examination Requirements for Investment Adviser Representatives (IAR Examination Requirements Model Rule) was updated to reflect current standards for certification.
  

• The amendments to the model rules aim to promote uniformity, ease regulatory burdens, and ensure investor protection.

M&A Broker Rule Amendment

NASAA's amendment to the M&A Broker Rule aligns it with the federal regulations found in subsection 15(b)(13) in the Securities Exchange Act of 1934. This change exempts certain M&A Brokers from broker-dealer registration. Again, the goal of this new amendment is to create uniformity between federal and state regulations.

Details:

• NASAA’s Broker-Dealer Section Committee and Market and Regulatory Policy and Review Project Group had requested membership approval for the changes to the Broker Rule.
  

• The updated rule allows M&A transactions involving eligible privately held companies while ensuring investor protection.
  

• The new amendment softens regulatory burdens for M&A Brokers while creating a streamlined regulatory environment.

Updated IAR Examination Requirements

The amendments to the IAR Examination Requirements Model Rule update the list of eligible professional certifications that can exempt individuals from examination requirements. The specific details of those updates are as follows:

Details:

• The Chartered Investment Counselor (CIC) certification was replaced with the Certified Investment Management Analyst (CIMA) certification.
  

• The Master of Science in Financial Services (MSFS) degree was removed from the list of eligible professional designations.
  

• These updates reflect current certification standards and maintain high standards within the financial services industry.

Statements from NASAA Leadership

Claire McHenry, NASAA President:

• "The approved amendments represent a significant step in adapting regulatory rules to the evolving landscape of federal and state regulatory activities. We look forward to working with our fellow NASAA members to implement these updated standards.”

Amy Kopleton, Chair of the NASAA Broker-Dealer Market and Regulatory Policy and Review Project Group:

• “This updated model rule achieves uniformity with the federal statutory exemption and helps facilitate M&A transactions involving eligible, privately held companies while ensuring investor protection.”

Elizabeth Bowling, Chair of the NASAA Exams Advisory Committee:

• “This amended rule enhances the evaluation and registration process for investment adviser representatives while maintaining high standards within the financial services industry.”

The amendments mark a pivotal shift in regulatory uniformity and professional standards within the financial services sector, reinforcing NASAA's emphasis on investor protection and regulatory efficiency.

Visit the Resources page on our website to learn more about the impacts of these rule amendments.