A new approach to regulation - Birmingham Business Journal:

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Congress and the administration must weave together multiple layers of protectio nfor investors, markets and the economyh as a whole. A multi-layered approach should includeefederal regulators, state regulators and self-regulatory organizations. The believes an improvexd system of financial services regulation mustbe efficient, comprehensive and strong. Throughout the Unitex States, state securities regulators have a long history of providinfg national leadership on issuesd of real concern to Main Street The unique experiences of state securities regulators on the frony lines of investor protection provide the frameworkl of the following five core principles forregulatoryy reform.
First, the new approach to financial services regulation must build upon the collaboration betwee n state andfederal authorities. Regulating our financiaol markets is an enormous challenge that requires the combine efforts of state and federal regulatorx to protect the integrity of the marketplace and to shielxd consumers from fraud and State securities regulators must not be preempted or marginalizedr as mere advisers tofederal authorities. Particularly in the areas of enforcement, licensing and compliancre examinations, state regulators add an indispensable layer ofconsumer protection. Second, the new approachg must take advantage of opportunities to streamline thiscollaborativw system.
Better interagency communicatioh is the key togreater efficiency. To facilitatr communication, the President’s should be expanded to include representatives from the state agenciea thatregulate banking, insurance and securities. Existing federal and state agencies also need better monitoring practices to detect risk infinanciall markets, share their findings with one another and develol coordinated responses. Third, the new approach must guarantee that no marketxescape regulation.
Gaps in the current regulatoryt system have allowed an enormous amoung of capital to be tradedr on opaquefinancial markets, free from licensing, oversight and Closing these regulatory gaps would ensure greater transparenchy for all financial markets, products and participants. the new approach must demand highetr standards of conduct in all financial In the area ofsecurities regulation, authoritiesz should impose the fiduciary duty on all securities professionalw who dispense investment advice, including broker-dealers.
Every sectore must be held to more stringent accounting standards and capita l requirements to ensure transparency and solvency the new approach must toughen punishments for thosde who violatesecurities laws. Lawmakers should increased the enforcement budgets for state and federaol regulators to fund aggressive investigations into thosd who abusethe consumer’s trust. Consumers must also be assured the right to seek privat e action against sellers of fraudulent financial State securities regulators also must continue to provided a valuable layer of protectionthat – in conjunction with theifr federal counterparts and industry self-regulatorsx – insulates the investing public, the markets and the overalll economy from subsequent financial freezes.