National Conference of Commissioners on Uniform State Laws

211 E. Ontario St., Suite 1300, Chicago, IL 60611
tel 312-915-0195, fax 312-915-0187

For Immediate Release

NEW UNIFORM SECURITIES ACT APPROVED
Law Governing Regulation of Securities by States Modernized

August 5, 2002 — A new Uniform Securities Act (USA) was approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL) at its 111th Annual Meeting, just concluded in Tucson, Arizona. USA will protect the public interest and should have the beneficial effect of making state regulation of the securities business more effective, thereby increasing investor confidence. The Act encourages maximum cooperation among the states and coordination with federal regulators.

"We believe that the enactment of the Uniform Securities Act by the states would be especially timely in this post-Enron environment," said K. King Burnett, President of NCCUSL.

Joe Borg, Alabama Securities Director and current President of the North American Securities Administrators Association (NASAA), said, "NASAA's project group is confident this new act modernizes the uniform law and provides state securities regulators with all of the old tools and many new tools to do our job and protect America's investors."

Every state has an agency that enforces its securities laws; most have adopted some version of the prior Uniform Securities Act. State securities administrators have broad powers to protect investors by regulating securities sold within their states and those who sell them, and to investigate, sanction, and prosecute individuals and firms that violate the law. This function is crucial to promote the integrity of the financial markets and the formation of capital.

The Uniform Securities Act was originally promulgated by the NCCUSL in 1956 and then substantially revised in 1985. The enactment of the federal National Securities Markets Improvement Act (NSMIA) in 1996 preempted some of the regulatory authority of the states. This fact, the need to address recent advances in the technology of securities regulation, and the increasingly interstate and international aspects of security transactions, prompted NCCUSL to draft the new act.

USA is designed to be consistent with current federal law. Although NSMIA forbids states from regulating certain aspects of the securities registration and reporting process, and certain federal covered individuals, it does not diminish state authority to investigate and bring enforcement actions with respect to intrastate securities transactions.

USA prohibits fraud in the sale of securities, and imposes registration requirements for certain broker-dealers, investment advisors, and their agents. It also imposes registration requirements for securities to be sold within the state, and provides various sanctions as well as civil and criminal liability. The Act also contains provisions on administration and judicial review, and prohibits administrators' officers and employees from using information that is not public for their personal benefit.

The drafting committee to revise the Uniform Securities Act was chaired by Richard B. Smith of New York. Other committee members included: John Fox Arnold, St. Louis, Missouri; Henry M. Kittleson, Lakeland, Florida; Andrew Richner, Lansing, Michigan; Michael P. Sullivan, Minneapolis, Minnesota; Howard J. Swibel, Chicago, Illinois; Robert J. Tennessen, Minneapolis, Minnesota; Justin L. Vigdor, Rochester, New York; and Lee Yeakel, Austin, Texas. Joel Seligman, Professor of Law at Washington University School of Law in St. Louis, Missouri, served as the committee's reporter.

The National Conference of Commissioners on Uniform State Laws is now in its 111th year. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to draft proposals for uniform and model laws and work toward their enactment in their legislatures. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.

For further information, please contact John McCabe or Katie Robinson at 312-915-0195, or Gabrielle Bamberger at 212-333-5222.