State securities regulators are calling on the U.S. Congress to toughen proposed regulatory reforms for the financial sector that were recently approved by the Senate Banking Committee.

Speaking at the North American Securities Administrators Association’s public policy conference, NASAA president and Texas securities commissioner, Denise Voigt Crawford, urged the Senate to shore up provisions in the bill that had been weakened to gain political support.

“This is the time for real reform that brings accountability and increased transparency to our financial markets. Investors deserve more from Congress than legislation driven by industry interests,” said Crawford. “Now is the time for Congress to do the right thing for investors and restore integrity in the marketplace.”

In particular, she singled out plans to extend the fiduciary duty standard of care to stockbrokers who provide investment advice, which was eliminated in favour of a plan to simply study the issue.

“State securities regulators are profoundly disappointed that the latest Senate bill removed the single most important protection for individual investors – requiring that stockbrokers providing investment advice act in their clients’ best interest,” Crawford said. “Instead of offering protections, the reform package offers delay in the form of yet another study designed to derail efforts to secure the protections investors need and deserve.”

Among other things, Crawford also said that NASAA will push for an end to mandatory arbitration to settle securities disputes.

“Neither the House nor Senate bills go far enough,” she said. “They should call for an SEC rule prohibiting these oppressive clauses. The SEC has historically been unwilling to take up the issue of mandatory arbitration and that is not likely to change simply as the result of a discretionary rule-making provision in the bill.”

IE