NASAA Testifies at Congressional Hearing on Proposals to Put Main Street Investor Interests First

WASHINGTON, DC, April 3, 2019 – The North American Securities Administrators Association (NASAA) today offered strong support for a series of legislative proposals designed to promote investor confidence and greater corporate accountability by removing advantages detrimental to the interests of Main Street investors.

“NASAA applauds the Subcommittee on its decision to hold its initial hearings of the 116th Congress on proposals that explicitly place the interest of Main Street investors first,” Maryland Securities Commissioner and NASAA Board member Melanie Lubin testified before the House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, chaired by Rep. Carolyn Maloney (D-NY).

“When we put the interests of Main Street investors first, our capital markets, our economy and our country all win,” Commissioner Lubin said her testimony on behalf of NASAA.

The six proposals the committee reviewed included the Investor Choice Act of 2019, which would prohibit broker-dealers and investment advisers from including binding pre-dispute arbitration clauses in customer account agreements. The bill also would prohibit the use of pre-dispute arbitration clauses in relation to shareholder disputes, registration statements, and governing corporate documents. “We strongly support the current bill, and we look forward to working with the Chairwoman and the Committee in passing the legislation this year,” Commissioner Lubin testified.

NASAA also expressed support for the Insider Trading Prohibition Act of 2019, which would create an explicit statutory definition of “insider trading.” Commissioner Lubin called the proposed legislation a “major step forward,” in codifying much of the existing insider trading case law.

Similarly, NASAA supports the introduction of “The 8-K Trading Gap Act of 2019,” which seeks to quash the opportunity for taking advantage of non-public information that occurs between the time an insider learns of a corporate event and the required filing with the SEC of a Form 8-K. “We agree that there appears to be compelling evidence that corporate insiders take advantage of this trading gap,” Commissioner Lubin said. “Closing this gap is a basic issue of fairness for retail investors.”

Commissioner Lubin said NASAA backs draft legislation to clarify that whistleblowers are protected by anti-retaliation provisions when they report alleged misconduct to their employers. This bill is a necessary response to the Supreme Court’s 2018 holding in Digital Realty Trust, Inc. v. Somers that only whistleblowers reporting directly to the SEC are protected.

Her testimony also urged Congress to address outstanding rulemakings related to executive compensation. Two draft bills seek to compel the SEC to complete rulemakings mandated by Dodd-Frank Sections 954 and 953(a).

“The Dodd-Frank Act has largely achieved its goals, and where appropriate Congress has taken steps to adjust certain of its provisions,” Commissioner Lubin testified. “Just as the 111th Congress was correct to reform our financial system in 2010, the 116th Congress is correct to insist that the SEC fully implement the law, including by completing these mandatory rulemakings.”

Visit NASAA’s website at for a complete copy of Commissioner Lubin’s testimony.

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