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NATIONAL SECURITIES MARKET IMPROVEMENT ACT OF 1996

The National Securities Market Improvement Act of 1996, also known as the Coordination Act, eliminated the duplication of effort among state and federal regulators. Some of the key points of the act include:

• Federal law overrides state law.

• Registration requirements for investment advisers.

• Capital requirements.

• Increased industry competition by eliminating collusive behavior.

The act ensured that no action by any state or political subdivision could impose laws or requirements upon any broker dealer that differed from or are in addition to those of the Securities Exchange Act of 1934 relating to:

• Capital requirements

• Recordkeeping

• Financial reporting

• Margin

• Custody

THE UNIFORM SECURITIES ACT

In the early half of the twentieth century, state securities regulators developed their state's rules and regulations for transacting securities business within their state. The result was regulations that varied widely from state to state. The Uniform Securities Act (USA) laid out model legislation for all states in an effort to make each state's rules and regulations more uniform and easier to address. The USA, also known as The Act, sets minimum qualification standards for each state securities administrator. The state securities administrator is the top securities regulator within the state. The state securities administrator may be the attorney general of that state or an individual appointed specifically to that post. The USA also:

• Prohibits the state securities administrator from using the post for personal benefit or from disclosing information.

• Gives the state securities administrator authority to enforce the rules of the USA within that state.

• Gives the administrator the ability to set certain registration requirements for broker dealers, agents, and investment advisers.

• Permits state administrators to set fee and testing requirements within the state.

• Administrators may suspend or revoke the state registration of a broker dealer, agent, investment adviser, a security, or a security's exemption from registration.

• The USA also sets civil and criminal penalties for violators.

The state-based laws set forth by the USA are also known as blue-sky laws.

 
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