The State Securities Administrator

Now that you understand the USA itself, the next question is: who enforces it? Every state designates an official to administer and enforce its securities laws: the Administrator.

Definition and Role (Section 401(a), 406)

  • The Administrator is the state official or agency designated to administer and enforce the state's securities laws
  • The title varies by state:
    • Commissioner (e.g., Securities Commissioner)
    • Director (e.g., Director of Securities)
    • Secretary of State (in some states)
    • Other titles depending on the jurisdiction
  • The Administrator is appointed or designated according to each state's own procedures. The USA leaves this to the individual state
  • Each state has its own Administrator; there is no single national Administrator

NASAA vs. the Administrator:

  • NASAA (North American Securities Administrators Association) is the organization that coordinates among state Administrators
  • NASAA itself is NOT a regulator and does NOT have enforcement authority
  • NASAA creates model rules and coordinates policy, but individual state Administrators enforce the law

Exam Tip: Gotchas

  • NASAA is a coordinating body, not a regulator. It cannot bring enforcement actions, issue orders, or investigate violations. Only the individual state Administrator can do those things within their state.
  • The Administrator's title varies by state. It may be Commissioner, Director, Secretary of State, or something else entirely. The exam does not assume a single title.

Confidentiality Obligation (Section 406(b))

The Administrator has access to sensitive information filed by registrants and obtained through investigations. Section 406(b) imposes strict limits:

  • It is unlawful for the Administrator or any officers/employees to use non-public information for personal benefit
  • The Administrator may not disclose non-public information except:
    • Among the Administrator's own staff
    • When necessary or appropriate in a proceeding or investigation under the Act

What this means in practice:

  • An Administrator's employee who trades on confidential information from a filing violates Section 406(b)
  • The Administrator can share information with staff members working on an investigation
  • The Administrator can use information in formal proceedings under the Act

Exam Tip: Gotchas

  • Confidentiality applies to the Administrator's own staff too. Officers and employees cannot use non-public information obtained through their work for personal benefit.

Rulemaking Authority

The Administrator has the power to:

  • Make, amend, and rescind rules and orders necessary to carry out the provisions of the Act
  • Rules must be consistent with the Act and follow applicable state administrative procedures
  • Require persons to file statements in writing, under oath, concerning matters under investigation

Think of it this way: The USA is the blueprint, but the Administrator is the builder. Each state's Administrator fills in the gaps by making rules specific to that state, as long as those rules stay consistent with the Act.

Exam Tip: Gotchas

  • The Administrator can require written statements under oath. This applies to both investigations and rulemaking proceedings.