November 8, 1993
TO: INVESTMENT ADVISERS COMMITTEE NO. 35-93
PUBLIC INFORMATION COMMITTEE NO. 59-93
STATE LIAISON COMMITTEE NO. 52-93
RE: INSTITUTE’S RESPONSE TO UNFAVORABLE ARTICLE ABOUT NASAA
PRESIDENT-ELECT
__________________________________________________________
An article recently published in worth magazine about Colorado Securities
Commissioner Phil Feigin, who is the president-elect of NASAA, included a number
of inaccurate statements. In response, the Institute submitted a letter to the
magazine’s editor. A copy of the article and the Institute’s letter is attached.
The worth article discussed, among other things, Commissioner Feigin’s
efforts to pass legislation regulating investment advisers doing business in
Colorado. Currently, Colorado does not regulate the activities of such
investment advisers. While Commissioner Feigin has been seeking the adoption of
legislation patterned after the Uniform Securities Act and the NASAA Model
Amendments thereto governing investment advisers, the article portrays
Commissioner Feigin as seeking legislation that advances the interests of
industry to the detriment of investors. As a consequence, the article expressed
concern about Commissioner Feigin changing the "pro-investor focus" of NASAA when
he becomes president in September, 1994.
The Institute’s letter explains that Commissioner Feigin is following the
lead of approximately 43 other states in seeking adoption of the Uniform
Securities Act and the NASAA Model Amendments thereto. It further explains why
this uniform approach to investment adviser regulation provides greater investor
protection than the approach taken in the alternative proposal discussed in the
article.
The alternative proposal, which is touted in the article as the preferable
approach, would not provide any real investor protection. Instead of providing
for the registration and regulation of investment advisers, the alternative bill
merely provides recourse once on investor has been victimized by an
investment adviser. As described in the Institute’s letter, under the
alternative proposal, "an investor must be victimized in order to have any
protection; and, once victimized, the investor’s only recourse is to bring suit
against the financial planner, a costly and lengthy process."
Tamara K. Cain
Assistant Counsel
Attachment