There is an old saying: “the more things change, the more they stay the same.” It seems every few years (usually, the result of a political shift) we see the states become more involved in securities enforcement. Our current time is now subject to this cyclical experience.

The SEC and the North American Securities Administrators Association (“NASAA”), the state securities regulators, have signed a memorandum of understanding (“MOU”) to share information so as to assist each other in monitoring compliance over, among other things, the new crowdfunding rules and fraud. http://nasaa.cdn.s3.amazonaws.com/wp-content/uploads/2017/02/MOU.pdf. The SEC and NASAA’s individual members — the states– will use this information in investigations, examinations, and any proceeding or civil action. The SEC and NASAA believe this new MOU continues their long-standing partnership over enforcement and compliance issues.

However, we should not be fooled by this MOU. This is not a simple sharing of information, but, essentially, it will be a license for state securities regulators to obtain more information, resulting in more aggressive and common state prosecutions. Ironically, the federal securities laws were an attempt to unify and facilitate the capital raising process by having one set of rules and laws. However, given the political vagaries of our system, these arrangements could and, most likely, will result in the balkanization of our securities markets and practices.