November 2016

Legislative and Regulatory Highlights from State and Local Governments

State Elections Recap

On Tuesday, November 8th, elections were held for 12 governors, 86 state legislative chambers, 10 attorneys general, 9 treasurers, and 1 comptroller. The following are key highlights from those races. 

Governors. Gubernatorial elections were held in 12 states, including a special election in Oregon following the mid-term resignation of Governor Kitzhaber.  7 of the 12 elections were open races, with only 5 races including a re-election campaign (MT, NC, OR, UT & WA).  Overall, Democrats won 5 (DE, MT, OR, WA, and WV), compared to 6 for the Republicans (IN, MO, ND, NH, UT and VT).  The race in North Carolina is still too close to call and may not be decided before Thanksgiving.  Republicans picked up notable party-changes in Missouri, New Hampshire and Vermont.  This brings the national split to 32R-17D-1I.  

State Legislatures.  There were 86 of 99 State legislative chambers up for election this year.  These included 43 of 50 State Senates and 43 of 49 State Houses.  Alabama, Louisiana, Maryland, Mississippi, New Jersey, and Virginia did not hold legislative elections this year.  Michigan did not hold State Senate elections.  Nebraska has a non-partisan, unicameral legislature, which is considered a Senate for historical reasons, therefore did not hold a State House election.

Republicans and Democrats each gained 3 legislative chambers (IA Senate, KY House, and MN Senate for the Republicans, and NV Senate, NV Assembly and NM House for the Democrats). Those changes established full Republican control in 23 states:  AL, AZ, AR, FL, GA, ID, IA, IN, KS, KY, LA, MI, MS, ND, OH, OK, SC, SD, TN, TX, UT, WI, and WY.  Also, Democrats now hold traditional full party control in 5 states: CA, DE, HI, OR, and RI; the Democrats also have defacto full party control in Connecticut (discussed below).  This makes the current count: 32 legislatures under Republican control, 13 legislatures under Democratic control, 4 states with split legislatures (including Connecticut), and Nebraska’s unicameral, non-partisan Senate.  There are also still ballots coming in in Washington State (mail-in ballots post-marked on election day are considered timely), where there will be a 1-seat Republican lead in the Senate, and either a tie or 1-2 seat Democratic lead in the House.

Also of note, the Kentucky House flipped from a Democratic majority to a Republican supermajority (64/100 seats), and the Hawaiian Senate is now controlled unanimously by Democrats. Results are still pending for the New York Senate, where two races are still too close to call.

Attorneys General.  There were 10 state attorneys general up for election.  Five of the races featured incumbent candidates, all of whom were re-elected (MT, OR, UT, WA and WV).  Additionally, the Office of the Attorney General in Missouri, formerly held by a Democrat, is now held by a Republican.

Overall, Republicans won 5 races (IN, MO, MT, UT, and WV), and Democrats won 5 races (NC, OR, PA, VT, and WA).  This brings the total count to 24 Republican, 22 Democratic, and 4 nonpartisan attorneys general.

Treasurers. There were 9 state treasurers up for election this year. 4 of these races featured incumbent candidates in the general election, all of whom were re-elected.

Republicans won 5 races (MO, NC, ND, UT, and WA), compared to 4 wins for the Democrats (OR, PA, VT, and WV).  Additionally, the Treasury offices in Missouri, North Carolina, and Washington switched from Democrat to Republican.

Nationwide, there are now 23 Republican Treasurers, 12 Democratic Treasurers, and 13 appointed, non-partisan Treasurers. 

Comptrollers. Only 1 non-appointed state comptroller was up for election this year.  Illinois held a special election for a permanent replacement of Judy Baar Topinka (Republican), who passed away.  This seat was won by a Democrat, Susana Mendoza.

Nationwide, there are now 6 Republican Comptrollers, 4 Democratic Comptrollers, and 3 appointed, non-partisan Comptrollers.



NASAA. 2017 NASAA President & MN Commerce Commissioner Mike Rothman’s Presidential Address cited his 2017 priorities, including: enforcement, senior investor protection, investor education, capital formation & collaboration between state & federal securities regulators, as well as among states. He also announced the creation of a joint comm. composed of the NASAA Board-level Cybersecurity Comm. and the IA Cybersecurity & Technology Comm.

CaliforniaAB 2258, a minor but positive change to existing unclaimed property law, was signed into law Sept. 22, effective Jan. 1, 2017.  Under existing law, property escheats to the state after 3 years if the account holder hasn’t done one or more things with the account.  The new law includes certain electronic transactions as sufficient evidence to consider the account active. 

Florida. The OFR has finalized a list of rules all effective Nov. 15: 69W-200.001 definitions; 69W-500.011 registration of issuer under § 517.061(11), F.S., as dealer; 69W-600.012 rules of conduct; 69W-600.013 prohibited business practices for dealers and their associated persons; 69W-600.0131 prohibited business practices for IAs and their associated persons; 69W-600.014 books and records; 69W-700.010 preferred stock or debt securities; and 69W-1000.001 disciplinary guidelines. 

Illinois. A rule proposal was finalized Sept. 16 to include a registration exception for M&A brokers (based on the NASAA model rule) and business continuity planning requirements.

Indiana. An emergency crowdfunding rule, adopted Oct. 12 and effective Oct. 11, temporarily adds non-code provisions to assist in the implementation of new intrastate securities exemptions.

OhioHB 616 & SB 317 (not same-as), to enact the New Banking Act for OH, was heard Nov. 15 in House Financial Institutions, Housing & Urban Development.

OhioHB 593, which would permit intrastate equity crowdfunding under certain circumstances, was referred to comm. Nov. 10.

Oregon. The Consumer & Business Services Dept. drafted a proposal to require BDs and IAs to maintain $1M in errors and omissions insurance as a condition of state license, if the BD/IA has discretionary trading authority or custody of client funds; there are exceptions.  If enacted, the requirement would take effect Jul. 31, 2018.

Pennsylvania. A new unclaimed property law which took effect Sept. 10, allows PA to seize some retirement accounts 3 years after they're presumed abandoned, regardless of the account owner's age.

PennsylvaniaHB 1398, which would revise provisions on distributions by business corporations by adding provisions on derivative actions, was presented to the Gov. Nov. 14.

Virginia. The Securities Division issued an order Oct. 14 to adopt a revision to the rules governing the foreign issuers securities exemption to the VA Securities Act.  The proposed amendment would provide a foreign securities exemption following a NASAA uniform exemption to use for these notice filings. Under the proposed exemption, high quality foreign issuers will not be subject to the prohibited business conduct rules governing broker-dealers.  Comments are due Dec. 1.


State Run Retirement Savings Plans for private sector workers

DOL Letter. SIFMA submitted a comment letter Sept. 29 on DOL’s proposal to expand its newly finalized rule on state run retirement plans to include state political subdivisions.

California The Secure Choice Retirement Savings Board met Oct. 24; this was the first meeting since SB 1234 was enacted in Sept.  The Board discussed a proposed timeline, where by the end of 2017 it will begin to develop investment policies and design and develop employee packet information.  K&L Gates is working on a letter to the SEC asking for a no-action letter from the commission.

Illinois. The Secure Choice Savings Board established Investment Principles for Illinois’ state run retirement savings plan for private sector workers earlier this year.

New Mexico. The Investments & Pensions Oversight Comm. held a two-day hearing in late Oct.  on marketplace legislation and other alternatives.  After testimony, from entities such as AARP, the Georgetown Center for Retirement Initiatives, Fidelity, and the NM Association of Commerce and Industry, the Comm. chair noted that, while mandates may be effective, the state can't afford such a mandate right now.

New York City. The NYC Comptroller announced the NYC Nest Egg Plan earlier this month.  It would be a city-run retirement plan for private sector workers, to include a retirement plan marketplace, a city-run open MEP, a city-run ‘secure choice’-style auto-IRA, and also feature the Federal MyRA program.

Oregon. The Retirement Savings Plan Board (ORSPB) met Nov. 16,  discussing a final draft of a status Report to the Legislature and an Investment Policy Discussion Draft.

Washington State.  The product verification process has been announced for the WA State Small Business Retirement Marketplace.



Senior Investors

Regional Senior Investor Protection Workshop Update.  SIFMA hosted its first Regional Senior Investor Protection Workshop Sept. 21 in St. Petersburg, FL at Raymond James.  The event, which included expert industry & law enforcement speakers and table top scenarios, was a great success.

FINRA. FINRA filed its long-awaited report & hold rule with the SEC Oct. 19.  There are several changes from the initial proposal.

Colorado. The Dept. of Regulatory Agencies held a Sept. 26 meeting on preventing the financial exploitation of seniors.  The Securities Director is pursuing NASAA Model legislation; it awaits Gov. sign-off.

Oregon. The Senior Financial Protection Workgroup had a meeting in Oct. to discuss the latest OR Senior & Vulnerable Adult Financial Protection Act draft.

Texas. SIFMA is working with a coalition in TX to draft senior protection legislation for the 2017 session.  


Taxes, Fees & Budget

Kentucky. The Republicans won a majority in the House, creating full GOP control in KY. The Gov. said KY's new Republican legislature would overhaul the state's tax code in 2017.  It would likely have to happen in a special session.

New JerseyA. 3868 (fiscal est.), reported out of Assembly Appropriations Oct. 27, would impose corporate business tax and gross income tax on income attributable to certain investment management services that a corporate or individual partner provides on behalf of a partnership, to ensure that a possible “carried interest loophole” is not used under NJ tax law. 

New York State. The NYS DTF updated its instructions for the 2015 Art. 9-A tax forms on its website Aug. 5. highlighting the position on other financial instruments; whether they should be treated as QFIs and how they should be treated under MTM apportionment. Taxpayers should not view the entire other financial instruments as one broad type of financial instrument; rather, they must narrowly review each financial instrument.

OhioHB 592, to subject small business investment companies to the commercial activity tax rather than the financial institutions tax, was referred to Ways & Means Nov. 10.

Oregon. Measure 97, which would have raised over $3 billion/yr. in new unrestricted tax revenue, was defeated.


Labor and Employment

CaliforniaCriminal background checkAB 1843, signed by the Gov. Sept. 27, prohibits an employer from asking an applicant to disclose information related to arrest, detention, or court disposition that occurred while the person was subject to the jurisdiction of juvenile court law.  There is an exception where required by law. 

CaliforniaChoice of law/Consent to jurisdiction.  SB 1241, signed by the Gov. Sept. 25, prohibits an employer from requiring an employee who primarily resides and works in CA to agree as a condition of employment to a provision that would require the employee to adjudicate outside of CA or deprive the employee of the substantive protection of CA law.

MassachusettsCredit background check.  A Boston City Council Ordinance heard Sept. 20 would restrict an employer’s ability to use credit background checks. There is an exception for financial institutions, including broker-dealers and entities registered with the SEC.

New HampshireCriminal background checkHB 1108, to prohibit employers from asking a job applicant about criminal history prior to making a conditional offer of employment, was studied in an Interim Study Full Comm. Work Session and a report not recommending the bill for future legislation was issued Oct. 26.


State & Local Business Relations

FINRA RN 16-29. SIFMA submitted comments on FINRA RN 16-29 (a gifts & entertainment proposal) on Sept. 23. 

California. In late July, the State Treasurer announced that municipal finance firms seeking state business will be required to certify that they make no contributions to bond election campaigns. Firms that fail to do so will be removed from the state’s official list of acceptable vendors and barred from participating in state-issued bonds. SIFMA provided extensive comments on disclosure forms; the forms were modified to address these concerns.  Initial certifications were due Nov. 15; subsequent certifications are due quarterly starting 1Q2017. 

New JerseyS. 2655, intro’d and referred to comm. Oct. 7, would require issue advocacy organization disclosure and increase disclosure of campaign finance information.  It would also raise the amount of money contributable to committees and modify restrictions on contributions by certain business entities performing public contracts.

New York State. An emergency rulemaking (see p. 2) regarding campaign contributions, adopted Oct. 12 and expiring Dec. 21, 2016, provides for changes to the content and manner of disclosures required by independent expenditure entities. PACs are defined, and additional disclosures and limitations required by law are provided for.

PennsylvaniaSB 340, to establish new due diligence requirements for local gov’t units that issue a guaranty of debt for other separate and distinct gov’t units, passed the Senate and was sent to the House Local Gov’t Comm. in Oct.



New York State. The NYS DFS proposed a state cybersecurity regulation Sept. 28.  The 45-day comment period closed Nov. 14.  SIFMA, along with ABA, FSR, FSSCC, AFSA, MBA, ALTA & NYMBA, submitted comments.

Washington State. WA State has proposed a rule that would implement changes required by the FAST Act.  The comment deadline is Nov. 22.


State Government Affairs Comm. Member Mtg. Schedule

SIFMA State Regulation & Legislation Committee meets via conference call the 1st Thursday of the month and in person the 3rd Thursday of the month.

SIFMA State Tax Committee meets the 1st Thursday of the month. 

SIFMA State & Local Business Relationships Committee meets the 2nd Thursday of the month.


Upcoming Events

SIFMA C&L 2017 Annual Seminar. This year, the SIFMA C&L Annual Seminar will take place at the Marriott Marquis, San Diego Marina from March 19 - 22. Registration has just opened and is available here.

SIFMA February Albany Lobby Day. This year, Albany Lobby Day will take place on February 6 & 7.  The schedule will be similar to years past, with possible afternoon appointments on Monday, Feb. 6 and then a full day of meetings on Tuesday, Feb. 7.


State Legislatures in Session


New Jersey





SIFMA Resources

SIFMA's State Government Relations team monitors and engages on legislative and regulatory developments in all 50 states, as well as certain local governments. Visit: to see all news and activity.

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