State securities regulators will be able to share information on financial organizations more easily under a new computerized data system being established nationwide.
Sharing information between states will help the securities officials uncover troubled brokerage firms or financial advisory firms, says the North American Securities Administrators Association. It also will help pinpoint what issues the regulators need to focus on and what types of firms have the most problems, says Nasaa president William Beatty.
Nasaa, which represents state financial regulators, has launched two of the three parts in the new digital reporting system, says Michael Huggs, director of the Mississippi Securities Division and the chief architect of the plan.
The system, known as NEMO, allows regulators to share information and has been in existence for several years. The new database is the latest update in a continually evolving program, Huggs says.
The newest evolution of the program will enable securities field examiners, who oversee broker-dealer firms and financial advisory firms, to share information in near real time, rather than waiting for information to be downloaded and compiled into spreadsheets.
The system does not involve individuals, but stops at the firm level.
The new computer software was originally introduced for reports on financial advisory firms and was launched for broker-dealer firms earlier this month. The information will be integrated next year so that state examiners preparing to go to a particular firm will be able to check the database to see how the other branches of the firm anywhere in the country faired on their exams.
It also will allow examiners to find out where problem areas seem to be concentrated, such as in large firms, sole proprietor firms, firms that sell certain products like penny stocks or variable annuities, or firms where the supervisor is offsite.
“The digital reporting system will allow us to slice and dice the information we receive from the individual state examiners in many different ways,” says Huggs. “Using that information, an examiner can better prepare for the examination of a particular firm.”
“Having the data that is filed by each of the examiners available to us in this form will enable us to know where to focus our efforts,” Beatty says.