Rule Revision: Agent Compensation Disclosure

PaperworkLast June, the Virginia Securities Division adopted the rule requiring firms to disclose agent compensation at the time of the solicitation and on the confirmation. Our members were concerned that the rule was inconsistent with existing federal and state compensation disclosure rules, and that they would be out of compliance with one if they followed the other.

Virginia’s new non-uniform standard could also have raised compliance costs for firms without adding any additional investor protection. To express these concerns, we submitted a comment letter with this information late last year, in part requesting that the Virginia Securities Division reinstate the rule back to its original form, which applied only to penny stocks.

After receiving comments, Virginia froze the rule and formed a working group. On May 14th, we visited with Director Ron Thomas and the Virginia Securities Division and outlined our members’ concerns over the rule.

On May 30th, we wrote a joint letter with SIFMA examining how the compensation disclosure rule is preempted by the National Securities Markets Improvement Act. After receiving it, the Division announced it would change the rule back to its original form.

We would like to thank Director Thomas and the Virginia Securities Division for listening to the industry’s concerns and taking a practical approach to improving the rule while continuing to protect investors.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s