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NASCUS Concerned SEC's Broker-Dealer Regs Could Preempt State Laws

While state-chartered credit unions are currently permitted to offer a variety of broker-related services, NASCUS recently told the Securities and Exchange Commission it is concerned that state laws will be preempted by the agency's Regulation R, which could trigger "redundant and costly examination and oversight." The SEC is aiming to...

By Staff Writer | Updated on April 03, 2007

WASHINGTON — While state-chartered credit unions are currently permitted to offer a variety of broker-related services, NASCUS recently told the Securities and Exchange Commission it is concerned that state laws will be preempted by the agency’s Regulation R, which could trigger “redundant and costly examination and oversight.” The SEC is aiming to implement the bank broker exceptions under Section 3(a)(4) of the Exchange Act, as amended by the Financial Services Regulatory Relief Act of 2006. Banks and thrifts would be exempt from registering as broker-dealers for engaging in networking, sweep accounts, trust and fiduciary, and safekeeping and custody activities. If CUs are not granted equivalent exemptions, they would have to register as a broker dealer, wrote Sandra Troutman, NASCUS executive president, government affairs, in a March 23 letter to the SEC. “It is likely that a credit union, facing additional regulatory burden and costs, would choose not to become a registered broker dealer and said services would no longer be offered to credit union members,” Troutman wrote.

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