PA Securities Regulators Observe 100 Years of Investor Protection

March Marks Centennial for State Securities Regulation

Mar 10, 2011, 15:35 ET from Pennsylvania Securities Commission

HARRISBURG, March 10, 2011 /PRNewswire/ -- The Pennsylvania Securities Commission (PSC) today joins state securities regulators across the country observing 100 years of protecting investors. The nation's first state securities law went into effect on March 10, 1911 in Kansas. Pennsylvania's current protection system is based on modernizing legislation passed in 1972.

"For a century, vigilance at the state level has been the first line of investor protection," said PSC Chairman Robert Lam.  "It's been our goal to ensure a level playing field and a fair deal for all."

Commissioner Tom Michlovic noted that over time, the role and responsibilities of state regulators has grown.  "One hundred years ago, equity investments were limited primarily to the wealthy.  Today, almost every American family has a stake in 'the market,' directly or indirectly through retirement accounts and investment and savings vehicles," Michlovic said.

"State securities regulators are proud to continue building on the century-old foundation of putting crooks running investment scams behind bars, returning lost money to investors and teaching our neighbors to spot and report the red flags of investment fraud."

Commissioner Steven Irwin said, "Looking back, as much as things change, some things remain the same like scam artists trying to take advantage of hard working citizens."  He noted that the first state securities laws came in an older era of unrest and reform. "William Howard Taft was President and followed in the reformist model of his predecessor, Teddy Roosevelt.  Taft was known for trust-busting, civil service reform and strengthening the Interstate Commerce Commission."

State securities regulators enforce the securities laws of the states, license investment firms and professionals doing business within their jurisdictions.  Lam, whose service on the commission has been uninterrupted since 1980, said, "While investment instruments have multiplied and have become incredibly complex over the years, the basic principles remain the same for regulatory organizations like the Pennsylvania Securities Commission.  It's always a delicate balance between risk and reward and in most cases we investigate, things go wrong when investors are promised 'easy money' with no risk.  That's when it's 'buyer beware.'"  

Michlovic noted that the Pennsylvania commission was one of the first in the nation to inaugurate an internet fraud unit.  Irwin has been leading the commission's newest initiatives to treat investment fraud as an all-too-common form of elder abuse.

As the regulators closest to investors, state securities regulators are often first to receive investor complaints, allowing state investigators to identify and stop emerging frauds, prevent harm to other investors, recover stolen funds, and penalize the scam artists.

The most recent NASAA statistics show that in 2009, state securities regulators collectively initiated nearly 2,300 enforcement actions, which led to more than $4.7 billion ordered returned to defrauded investors and 1,786 years in jail for convicted con artists. State securities regulators also conducted more than 1,800 investor education presentations nationwide.  During that same period, the Pennsylvania commission reached settlements with brokerages involved in the sale of so-called "auction rate securities" to set aside hundreds of millions of dollars to reimburse Pennsylvania investors who were misled into thinking such securities were "highly liquid" investments.

Reforms are taking shape at the national level to give new authority to state securities regulators to address the challenges facing 21st century investors.

The Pennsylvania Securities Commission will join other state regulatory agencies and the North American Securities Administrators Association (NASAA) in celebrating the centennial of state securities regulation at NASAA's annual conference, September 11-13, 2011 in Wichita, Kansas.

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SOURCE Pennsylvania Securities Commission