Securities regulators are gearing up to present states with model rules for securities sales at banks and other financial institutions.
The latest version of the guidelines, from a committee of the North American Securities Administrators Association Inc., will be submitted to its board in early October, said Thomas E. Geyer, the committee chairman. Mr. Geyer is commissioner of the Ohio Division of Securities.
The proposal would then be voted on by the NASAA's 65 members, who include state securities regulators.
The draft guidelines closely resemble regulations implemented in February by the National Association of Securities Dealers. They also contain passages from the "Interagency Statement on Retail Sales of Nondeposit Investment Products," a joint memo by federal regulatory agencies, which focused on bank brokerages.
Mr. Geyer said he hoped the guidelines-which deal with issues such as standards of conduct, customer disclosure, and communications with the public-would encourage states to adopt uniform regulations. Only a handful of states have laws on the sale of securities at financial institutions, he said.
Observers supported the committee's efforts and said that tailoring state regulators' guidelines to federal rules would reduce confusion. "It's very expensive to comply with multiple rules and very time-consuming and cumbersome," said Melanie L. Fein, a banking lawyer with Arnold & Porter, Washington.
Model rules for states have been under consideration since about 1994, Mr. Geyer said. The committee published a version last March, but implementation was delayed after industry professionals and trade groups complained that the proposal was too different from rules under consideration by the NASD.
In February the NASD passed Rule 2350, which deals with securities sales at financial institutions. Two months later the committee of the state regulators group published revised guidelines that mirrored Rule 2350 and included passages from the interagency statement.
A proposal submitted in May by the state group's model rules committee received favorable response during a public comment period that ended July 31, Mr. Geyer said. Additional changes, mostly cosmetic, were made two weeks ago, resulting in model rules that are nearly identical to NASD regulations.
The proposal will not be resubmitted for public comment, Mr. Geyer said. "They are changes made in response to comments we received, so we don't anticipate that there would be any concern."
Though he had not seen the most recent changes, Robert F. Gannon, vice president, management services at the Securities Industry Association, New York, said its members-about 800 investment banks, brokerages, and mutual fund companies-would probably support them.
"Anything that would bring the NASAA rules more in line with the NASD rules would be welcomed by our members," Mr. Gannon said.
