State regulators say they’re not missing an oversight beat


State securities regulators are expressing confidence that they’re not missing a beat in their oversight of investment advisers and brokers despite disruption caused by the COVID-19 pandemic.

The North American Securities Administrators Association has been surveying its members to see how they’re doing. So far, so good, seems to be the answer.

“All state regulators are continuing to operate,” said Christopher Gerold, chief of the New Jersey Bureau of Securities and NASAA president. “Most of them are working remotely with a skeleton crew in the office.”

Regulators are conducting examinations, pursuing enforcement cases and maintaining financial adviser registrations outside the office, as remote regulation becomes the new way of doing business.

For some states the change hasn’t been a big shock. In Vermont, 108 of 110 employees in the Department of Financial Regulation are currently working from home. But during normal times, 65 examiners have been based at home anyway.

“It’s not that much different to do it completely remotely,” said Michael Pieciak, Vermont securities commissioner. “We’re still fully regulating the industry remotely.”

The Alabama Securities Commission is up-to-date on licenses and registrations, most of which are filed electronically, according to its director, Joseph Borg.

“My IT team has done a damn good job,” Borg said. “Surprisingly enough, the transition [to remote work] went smoother than I thought it would.”

Various states have followed the Securities and Exchange Commission’s lead and offered regulatory relief to advisers and brokers.

For instance, both New Jersey and Alabama are allowing advisers to work from their homes if they’re registered in a nearby state where their offices are located.

“We will give them a waiver as long as they notify us,” Borg said.

State-by-state actions

More than 30 states have extended certain deadlines and provided other temporary relief, Melanie Lubin, Maryland Securities commissioner, said in March 25 testimony before the Financial Stability Oversight Council.

NASAA provides on its website a list of states that have taken steps to ease regulatory requirements in response to the disruption caused by the coronavirus.

“Because many of us are working remotely, our regulators are reaching out to our registrants to establish lines of communications and to figure out ways to address delays that might be caused by dislocations,” Lubin said.

That’s the approach that Pieciak is taking toward advisers and brokers in Vermont.

“Our advice to them is to exercise their best judgment and protect their employees, their customers and their firms,” Pieciak said.

Battling fraud

The virus outbreak has state regulators on the lookout for scams related to COVID-19.

“That does worry me, and it will take additional effort from us to try to counter that,” said Pieciak, who, along with the general counsel, is one of two employees still coming into the Vermont office.

Enforcement operations can continue efficiently over the phone, via email or through other digital means, according to Gerold. Such activity had been increasing before the conornavirus outbreak.

“The time of investigators being in the field four out of five days a week is past,” he said. “It hasn’t been in place for a number of years.”

State regulators oversee investment advisers who have less than $100 million in assets under management, while the SEC regulates those that are bigger. States also regulate brokerages that operate within their jurisdiction.

As the coronavirus continues to force regulatory staff members out of their offices, they may get used to the new normal, Borg said.

“I’m afraid that once this is over, no one will want to come back to work,” he said.

Written by Investors Wallets

Plan advisers may lose business as 401(k) sponsors struggle

Alight, Abbott Labs sued over account breach