Hey everyone!

I wrote a small blurb on state level regulators the other day and it got a bit of traction with people wanting me to go into more detail and delve into them more. I'm not going to link the previous post because I'll cover everything in there again. It's just one less thing you'll have to look at lol. So here we go.

Disclaimer: I actually know quite a bit about the state level regulators. I actually know many people that work at one of the state commissions (can provide proof to mods if need be). In fact, other than fast food, I worked at that commission as one of my first jobs. I mostly did clerical work (filing, plugging numbers into excel, etc.) so I never really knew details of cases, just broad strokes. I won't be using specifics when it comes to people there or any cases, because they are basically a branch of law enforcement. They can't share about cases so, even if I knew anything, I couldn't either. As far as NASAA goes, I don't know near as much. I've been to a couple of their conferences, but I was too young to know anything about what was going on.

Okay, now that that's out of the way, lets get into it.

A little background for you:

The SEC, being a bigger federal-level organization, is slow moving and bogged down in red tape. (I'm not gonna get into the possible conflicts of interest or corruption because it honestly isn't relevant to my point.) Because of this, the states decided to stand up their own Securities Commissions that focus on registration, fraud, etc. at the state level. They tend to be more compact (smaller just isn't the right word) and more agile, able to directly address problems within the state. For example, when a certain douchebag wolf decided to steal shittons of money, the states led the charge in the investigation because they could attack it from an individual investor's point of view. They aren't under the SEC, reporting directly to the state, but they do tend to share info and can help direct possible policy changes.

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North American Securities Administrators Association (NASAA):

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Fun fact: they actually pronounce it like the space administration. Super confusing for a kid who loved space and NASA.

NASAA is not a regulatory body. They are basically a club. And they don't just cover the US. With it being "North America" their memberships also include many provinces in Canada and several areas of Mexico. They serve as a framework for cross-communication, collaboration, and cooperation for all of North America.

As an example, lets say someone is cold calling people across the country saying they've discovered a new oil deposit in Texas. They're looking for 'investors,' so they make some compelling arguments, manage to get some people on board (doesn't matter where they're from), and start taking money. Only problem is, that oil deposit doesn't exist. Now they've committed investment fraud potentially across multiple different states. Those State Securities Commissions can use their connections gained through NASAA's framework to work together in their investigations.

Super simple. They just provide the contacts.

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State Securities Commissions:

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As I said before, I know many people at, and worked for a time, at one specific Commission. I don't know if every one of them work this way, but I would imagine they're all set up similar.

The Commission is broken down into 3 separate departments: Registration, Enforcement, and Legal, with a Director steering the whole ship.

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Registration:

Any broker/dealer who wants to do any kind of business in a particular state has to be registered to do so. If they aren't, it's illegal. Full stop. Think of this as a compliance office. When Massachusetts decided to pull RH's rights to sell in their state, it likely took place in this office. RH wasn't in compliance on the state level, so they are no longer able to sell to people in that state.

This department deals with everyone. And I mean everyone. They tend to have a massive file room with the registrations of companies as big as banks to as small as the independent guys. Dr. Burry would have had to be registered in whichever state his clients were.

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Enforcement:

These are your investigators. They sift through the case files, go and interview victims, and are the ones who make the arrests. Most of my clerical duties was aimed at helping them. Bank accounts plugged into Excel so they're easier to go through, run down to Archives to find this file that might have pertinent info, that kind of thing. Think of these guys as state police, they carry a gun and a badge. However, they also operate on a larger scale than a state trooper or anything else. They travel...a lot. They track down leads in different states, go to national conferences to learn about new type/techniques for fraud, etc.

For instance, when some asshole gets caught stealing little old ladies' retirement money, these would be the guys leading the charge to go and roll him up. Now there could be a bunch of different states working together for a bunch of little old ladies, but you get the idea.

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Legal:

Pretty self explanatory. Prosecutors, rules guys, anything you think of when you think lawyer lol. They can help the Enforcement division acquire warrants, explain to the Registration department why someone is or isn't in compliance, etc.

This is the office I actually know the least about. They were always at court or buried in mounds of documents. But I will say, at least for my state, these guys/gals were bulldogs. They went after shit relentlessly and I definitely wouldn't want to be on the other side of a case from them.

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Director:

If you want to know how effective your state's Securities Commission is, do a google search of this guy. If he's a good one, you'll find countless articles of him/her talking at conferences or being referenced for the fantastic job their doing. These are the guys that most directly work with the SEC and even higher, depending on the situation. Obviously, I never really saw behind the curtain at all on this job, but I'm sure you get the idea.

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Relationship with the SEC:

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I mentioned this a bit before, but the state level regulators report directly to the state, not the SEC. However, seeing as they basically have the same goal, they work closely together. Most notably, the states can put pressure on the SEC. They're on the front lines of investment fraud, seeing what's being done and talking to individual investors who have been screwed out of lots of money. If they see legitimate problems with the system or with regulations, they can start pushing. And the more states get together to make noise about it, the more likely it is that the SEC will have to do something.

I highly recommend you follow Dr. T's advice and go to www.nasaa.org and use their links/contact info to get ahold of your state commission. The more they are informed about this and the more pressure we apply, the better the chances of something actually changing on the regulators side of things.

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As I've mentioned several times, I personally know quite a few people at one of the State Securities Commissions (again, can provide proof). At least their office has been super interested in learning and delving into all of this. I actually have been sending them a bunch of DD (and a few memes) all while trying not to sound like a crazy person talking them through the situation. I'm sure other states are looking into this kind of stuff too and I know for a fact they've sent some of the god-tier DD (especially the u/atobitt master works) to some of their counterparts and allegedly to contacts at the SEC. Whether that means anything or not is still to be seen, but at least the word is starting to get out.

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If I've missed anything or gotten anything wrong, please let me know and I'll correct it. I may know some things, but I'm still a dumb ape.

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TL;DR: State Securities Commissions are on the individual investor's side. They actually care about you and will fight for their residents. Call them and bring all of this shit up to them. They can do more specific things than the SEC and can even pressure the SEC to make actual changes.

Edit: For my European brothers and sisters, you have OLAF which "investigates fraud against the EU budget, corruption and serious misconduct within the European institutions, and develops anti-fraud policy for the European Commission." I don't know much about them and I couldn't find anything else similar to them. Maybe search within your country for investment fraud agencies. I also found ESMA which "is an independent European Union (EU) Authority that contributes to safeguarding the stability of the EU's financial system by enhancing the protection of investors and promoting stable and orderly financial markets." Again, don't know much about these guys, but this may be an avenue for you to pursue.