NASAA Adopts Rule for Investment Advisors

The North American Securities Administrators Association said Monday that its membership has voted to adopt a model rule setting parameters on how to implement a continuing education program for investment adviser representatives (IARs) in their jurisdictions.

Unlike other financial service professions, IARs are not subject to a continuing education requirement to maintain their licenses with state regulators.

The model rule will help NASAA members “close this gap” by requiring IARs to take 12 hours of continuing education a year, NASAA said. State securities regulators can consider adopting the rule in their own jurisdictions.

“This model rule represents the culmination of years of work by state securities regulators and industry to develop a relevant and responsive continuing education program,” said Lisa Hopkins, NASAA president and West Virginia Senior Deputy Securities Commissioner, in a statement.

“This successful collaboration will help promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices,” Hopkins explained.

NASAA, a voluntary body made up of state securities regulators, conducted a survey in February regarding course content. (Its members include 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.)

The model rule has a products and practices component and an ethics component and is intended to be compatible with other continuing education programs.

The model rule is the result of several years of work by the NASAA Investment Adviser Representative Continuing Education Committee, chaired by Linda Cena, Examination and Licensing Manager for the Michigan Corporations, Securities & Commercial Licensing Bureau.

Cybersecurity, Business Continuity  

NASAA also has adopted a model rule that requires investment advisors to establish, maintain and enforce written policies and procedures that address: regulatory compliance, supervision, proxy voting, physical security and cybersecurity, business continuity and succession, code of ethics compliance, and the handling of material non-public information.

“Our goal with this consolidated and streamlined model rule is to help enhance the culture of investment adviser regulatory compliance to minimize conflicts and risks to better serve investors,” Hopkins said.

The model rule supplants and updates two existing NASAA model rules, the NASAA Model Rule on Business Continuity and Succession Planning (April 13, 2015) and the NASAA Investment Adviser Information Security and Privacy Rule Model Rule (May 19, 2019).

The proposal adopted by the NASAA membership also includes a compliance grid designed to help investment advisors develop and implement their own compliance policies and procedures. SOURCE