NC Rules Review Commission proposes standards governing use of “senior specialist” designations

On January 22, 2010, the NC Rules Review Commission approved the Department of the Secretary of State’s proposed rule on the use of senior designations by securities dealers, securities salesmen, investment advisers and investment adviser representatives. The rule becomes effective on February 1, 2010.

The rule, based on the Model Rule that the North American Securities Administrators Association (NASAA) adopted on March 20, 2008, applies only to people registered as securities dealers or salesmen and as investment advisers or investment adviser representatives.

In North Carolina, securities and investment advisers are prohibited by law from engaging in dishonest or unethical conduct. However, in recent years, securities regulators across the nation, including the NC Securities Division, have seen an explosion in the number of professional designations that various financial services professionals use in selling investment products. According to the September 2007 report, Protecting Senior Investors: Report of Examinations of Securities Firms Providing “Free Lunch” Sales Seminars, government and regulatory investigators determined that the use of some of these titles were confusing to many people and served to mislead them into thinking that the certifications were issued by a regulatory authority, when in fact that is not the case. In many cases, the credential serves merely as a marketing tool designed to convey the impression that the holder has more expertise than perhaps (s)he has. The rule which the Securities Division has adopted, therefore, is intended to prohibit the deceptive and misleading use of such designations in connection with the sale of investment products and services.

To read the full notice, go here.