Securities Regulation Daily Wrap Up, NASAA NEWS AND SPEECHES—NASAA highlights letter to Congress urging it to preserve state securities authority, (Nov 20, 2025)

By R. Jason Howard, J.D.

Congress should seek to ensure that the vital protections already provided by state regulators remain in place.

In a letter addressed to the Chairman and the Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, NASAA highlights that a letter from the Public Investors Advocate Bar Association (PIABA) urges Congress to oppose provisions in the Responsible Financial Innovation Act of 2025 (RFIA) dated September 5, 2025, that would “undermine the ability and authority of state securities regulators to fight fraud in this new federal market structure.”

In the letter, the PIABA opposes provisions in RFIA that would “weaken vital investor protections and expose more Americans to fraud and abuse” because, as written, “the bill undermines well-settled principles of securities regulation, making it harder for regulators to stop online scams and other investment frauds, and would remove important guardrails designed to screen out bad actors from the securities marketplace.”

The PIABA urges Congress to remove Section 105 of RFIA because that provision would redefine the investment contract test which both federal and state regulators rely on to combat new and emerging frauds that target Americans. The provisions in Section 105, the PIABA asserts, create ambiguities and loopholes which bad actors can exploit, including the new requirement that investors lose more than a minimum amount of money for a violation to exist and, given the current fraud epidemic being perpetrated against Americans, Congress “should not be pursuing policies that will make it easier for scam artists to get away with their crimes and harder for law enforcement and regulators to act.”

The PIABA also states that Congress should not weaken the safeguards surrounding state registration and licensing laws because those laws “promote trust in the capital markets by setting important professional conduct and knowledge standards.” In addition, the PIABA explains that state securities regulators are on the frontlines in protecting retail investors and, as such, Congress “should not enact laws that weaken existing state anti-fraud authority.”

The PIABA letter concludes by stating that Congress should seek to ensure that the vital protections already provided by state regulators remain in place and, as such, Congress should “abandon its effort to redefine investment contracts, maintain the critical guardrails provided through state registration and licensing laws, and protect existing state anti-fraud authority.”

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