Looking Back: July 1982 Part Two: Origins of NASAA’s Enforcement Committee

Written by: Phil Feigin

One of the side effects of the system was the creation of Series 63, the Uniform State Agent Securities Law Examination (“USASLE”). The states were required to drop their own exams in favor of the national exam, to the great relief of firms and reps across the country. Most states weren’t all that keen on keeping their own exams up to date and administering them anyway, so it was of benefit to them as well as the industry. Series 63 was to be administered by the NASD along with all the other NASD exams at its testing centers, at the NASD’s expense. That was another saving for the states. Finally, and perhaps most importantly, Series 63 was to be drafted and owned by NASAA. For the first time in its existence, NASAA would have an independent, and significant, funding source producing revenue and a budget far exceeding the experience of the past dependent on member jurisdiction dues. NASAA would only get a small fraction of the test fees, but it was still a substantial figure.

That meant that for the first time, NASAA could afford to fund staff members from NASAA member jurisdictions to attend face-to-face meetings at national conferences and otherwise during the year. This gave projects an enormous boost. Certainly, there had been meetings before, and staff members from jurisdictions with ample budgets had attended conferences in the past, but it was nothing like what the new era of Series 63 revenue provided.

I began my securities regulatory career in April 1979 as the Chief Attorney of the Enforcement Division of the Office of the Wisconsin Commissioner of Securities. The first annual conference I attended was that fall, in Little Rock, Arkansas (Anchorage had been selected site, but as it turned out, could not accommodate the meeting, so Little Rock filled in at the last minute). I attended on Wisconsin’s dime because NASAA funding had yet to kick in.

In 1979, I knew nothing of securities law, regulation or practice. Over the next three and half years, the excellent staff at the Wisconsin office had the patience to share with me their estimable and comprehensive knowledge and experience, on which I still rely every day of my practice, and for which I am forever grateful. I thrived in my new career, and being able to attend conferences and meetings, I began to participate in issues of national significance, initially, precious metals fraud.

With NASAA funding, the first winter enforcement meeting was held in January 1980, at the Big Mountain Ski Resort outside Whitefish, Montana, with R.G. “Rick” Tucker as our host. There were about 20 of us. Tom Krebs, the legendary director of the Alabama Securities Commission, was NASAA’s new president, and the Enforcement Committee chair was Wayne Howell of Georgia. There was no conference room—we sat wherever we could in the bedroom, with Krebs and Howell running the meeting from the bed. I remember discussing the idea of multistate investigations to be funded by NASAA, but worries about potentially adverse insurance ramifications quashed the idea.

We tromped along for the next few years, and enforcement types across the country got to know each other better from the face-to-face meeting opportunities. The first winter meeting in Whitefish had grown into a significant annual enforcement conference taking place in various venues. The January 1982 meeting was held again in Montana. Rick Tucker was the Chair of the Enforcement Committee for 1981-82. It was at this Montana meeting that I first met Royce Griffin. I had seen his name in the NASAA directory for prior years as a member of the Arkansas staff, but in February of 1981, he had been named Colorado Securities Commissioner. It would turn out to be an important meeting for both of us.

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Looking Back: July 1982 Part One

Written by: Phil Feigin

My life and career changed dramatically and forever in July 1982. I have been encouraged to do some reflecting on times past every once in a while. I couldn’t help but think back to 30 years ago this summer. It was one of those pivotal periods in my life—which is not particularly important to anyone but me, my family and friends—but also in securities regulation and the maturation of the North American Securities Administrators Association (“NASAA”).

Let me set the stage, first on NASAA. Until the late 1970s, NASAA was an organization where the “blue sky” administrators, the bosses, met twice a year, in Washington, D.C. in the spring and a host state venue in the fall. The administrators were usually outnumbered by a large multiple by industry professionals from brokerage firms, investment companies, law firms and the like. It was a good opportunity to discuss events, issues and projects blue sky staffs had been working on back home. NASAA was funded by the dues paid by the blue sky agencies and their jurisdictions. Therefore, it was usually the bosses alone who got to attend the meetings, and only those administrators able to obtain state funding for the trips.

Investing was becoming a middle class/consumer fact of life to an ever increasing degree, inflation was rampant, and brokers across the country were reaching out to investors everywhere, not just where the brokers had their offices. That meant that both firms and agents had to fill out forms, take qualification examinations and meet other requirements of each state jurisdiction where they sought investors, on top of what they had to do for the SEC and the NASD. That was becoming an unholy mess.

The late 1970s and early 80s saw an unusual spasm of uniformity and cooperation that must be marveled at and commended. The SEC, the states and NASAA, and the NASD worked together to come up with uniform forms, entry requirements and tests, and a computerized system for administering all of it. The most recognizable feature of the new system was the Central Registration Depository, or CRD. There were bumps in the road to be sure, and it wasn’t perfect, but the CRD and coordinated registration/licensing process for firms and reps remains a model and paragon for every multistate/federal regulatory registration/licensing structure.