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NASAA Plans 2023 Push for Bad Actors Database

By Melanie Waddell

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State securities regulators plan to press lawmakers in 2023 to mandate that regulators set up a bad actors database to track fraudsters.

The North American Securities Administrators Association’s just-released policy agenda states that Congress “should require the federal financial regulators to establish a bad actors database and allow state and local governments to participate in it,” as set out in the Tracking Bad Actors Act, which was introduced in the 117th Congress.

This bill, introduced last March by Sen. John Kennedy, R-La., “requires federal financial regulators to jointly publish a database of persons convicted or held liable in criminal, civil, or administrative actions regarding financial services that are brought by federal financial regulators, the Department of Justice, certain self-regulating organizations, or state or local agencies that voluntarily submit such information.”

The Government Accountability Office, according to the bill, “must report on the database five years after the database is operational.”

Andrew Hartnett, NASAA president and Iowa Insurance Division’s Deputy Administrator for Securities, told ThinkAdvisor Monday that the “database would allow investment advisors, brokerage firms, investors, legislators and regulators to have the information they need to guard against people known to have engaged in fraud.”

NASAA says the bill complements the bipartisan Stronger Enforcement of Civil Penalties Act, introduced by Sen. Jack Reed, D-R.I., in 2021, which “would update the SEC’s outdated civil penalties statutes and raise the financial stakes for repeat offenders of our nation’s securities laws.”

Melanie Waddell

@Think_MelanieW

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