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                    REMARKS BY ARTHUR LEVITT
         CHAIRMAN, U.S. SECURITIES & EXCHANGE COMMISSION
 NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION CONFERENCE
           SALT LAKE CITY, UTAH -- SEPTEMBER 9TH, 1996
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I'm here today to talk to you about a subject that has occupied
your attention and mine for more than a year now:  the dramatic
changes proposed by Congress in our system of securities
regulation.  

I said it last year and I'll say it again:   I recognize that
this is a sensitive subject.  But I come before you as a partner
and a friend, in the belief that it's better to face tough issues
together, than to face them apart.

Like other laws, this legislation is filled with good intentions. 
But we know from experience that intended changes can bring
unintended consequences.

And like other laws, this one is the product of much forethought. 
But we also know from experience that, no matter how well
thought-out a new law is, there are things that no one can
anticipate -- only hindsight is 20/20.

Our challenge as regulators is to take heed of the changing
environment and make the new laws work.  Our challenge, now as
always, is to protect investors.

I want to thank NASAA for engaging constructively in the dialogue
with the Hill.  A year ago the debate was cast in extremes...
between those caricatured as wanting to destroy state regulation
at any cost, and those caricatured as wishing to preserve the
status quo at any cost.  

In the last year, you've helped cool down some of the overheated
rhetoric on both sides, and I applaud you for that.  Together,
NASAA and the SEC have demonstrated an ability to take a good
hard look at ourselves, to determine what we do well, what we
don't do well, and what we might do better.  In each case where
our duties overlap, we are considering which of us is better
equipped to take the lead, and we are deferring to each other
accordingly.  This kind of regulatory self-reflection is rare; 
instead of putting our egos first, we put investors first.  And
while I'm at it, let me give credit to Jack Fields for his own
willingness to reflect -- the measured bill Congress is now
considering is a far cry from the document that arrived so
explosively last year.  I'd be remiss if I didn't also mention
Congressmen Bliley, Dingell, and Markey, and Senators D'Amato,
Gramm, Dodd, and Sarbanes, who have done so much to improve this
legislation and to ensure bipartisan support.

As you know, the legislation has been passed by the House and the
Senate and has the support of the SEC and the Administration. 
The bill is in Conference right now and the clock is ticking. 
Congress's agenda is filled and the election is nearing.  It's
unclear if this bill is enough of a priority to get attention in
this brief window.  I am not going to guess on the politics, but
with or without the bill, you and I were already moving to
increase cooperation and decrease duplication.  I want to remind
everybody that greater uniformity was not an idea unique to Jack
Fields -- it is the charter and the mission of this great
organization, the North American Securities Administrators
Association.

Even if the legislation fails, Congress may very well take it up
again next year.  But whatever Congress may choose to do, our
direction has always been clear.  Especially in an era when all
of our budgets are being cut, we need to cooperate more
efficiently, divide responsibilities more clearly, and use our
limited resources more strategically.  And we have been, in so
many areas.

Let me start with broker-dealer books and records requirements. 
Last year I said that, like you, I oppose the idea of 52 separate
requirements for books and records and I believe we ought to have
one uniform standard throughout the land.  I appreciate your
patience and good will since then as our staffs have worked hard
together to achieve that.  This morning, I met with your Board
and assured them that the Commission is currently considering a
proposal that NASAA has had enormous input into and influence on.
Shortly we'll submit a rule proposal for public comment for a
uniform national standard.  I believe you'll be pleased.

Last year, I called for a "Planning Summit" in which the SEC, the
states, and the SROs would come together to figure out ways to
examine firms effectively without disruption and without tripping
over one another.  Within a month, a national summit was held and
the SEC, the NASD, the New York Stock Exchange, the Amex, the
Chicago Board Options Exchange, and NASAA signed a Memorandum of
Understanding that now provides a framework for much better
coordination of broker-dealer examinations by all of us. 

This MOU is a process -- it is the beginning of a dialogue, not
the end.  But the results so far have been encouraging:   All of
the Commission's regional and district offices have since held at
least one planning summit with each state and regional NASD
office.  Our Fort Worth office even holds planning summits with
the states in its region quarterly.  It notifies states before
commencing a local examination, and works closely with them
throughout the process.  Our Southeast office has conducted
þcauseþ examinations of broker-dealer main offices in conjunction
with examiners from Puerto Rico.  Our Central Regional Office now
holds semiannual summits with the states, and has conducted joint
examinations in Colorado and Nebraska.  

In each and every instance in which we work together, we have an
opportunity to discuss areas of regulatory concern and new trends
in the markets.  What may be most important of all, however, is
that we divide our regulatory responsibilities in a more
efficient way.  The securities industry is simply too large, and
our resources too limited, for us to do anything less.

I recognize that our partnership is working well in some regions,
and less well in others.  But if we keep at it, our relationship
will get better, and it will grow.  To help ensure that, I've
asked our examiners to work together with you to develop standard
modules that state examiners may use in their examinations of
broker dealers and investment advisers.  These modules will help
to cover areas where I believe investors are at risk -- cold
calling, for example, as well as churning, suitability, and other
high-pressure sales practices, especially in pushing low-priced,
unseasoned companies.  We also want to continue to help you train
examiners in these areas.  I'm pleased that our Midwest Office
will soon hold a training conference on sales practices for state
examiners in the region.

We have already joined together to combat sales practice abuses. 
In March of this year, we announced the results of a landmark
joint regulatory sweep focusing on broker-dealer sales practices
-- historic because it was the first such joint effort by the
SEC, the NASD, the New York Stock Exchange, and state regulators. 
Fully one-third of these examinations found supervisory problems,
in varying degrees.  As a result, state and federal regulators
are taking disciplinary actions and increasing their emphasis on
supervisory procedures and obligations, and so is the industry. 
We must continue to work together to implement the
recommendations made in our report regarding these practices.

We are also working together to try to bring better oversight to
the huge population of smaller investment advisers and financial
planners.  We've conducted nine successful joint sweeps of
investment advisers in the last 15 months.  More than 280
examinations were completed in Maryland, Washington state,
Minnesota, Virginia, Wisconsin, Texas, Nevada, Nebraska, Iowa,
and Pennsylvania.  While together we've examined 280 of them,
there are some 12,700 unexamined small financial planners still
out there.  We need your help to better oversee these advisers.  

All this cooperation among our people in the field is positive --
and yet it will come to nothing without cooperation at the
highest levels of NASAA and the SEC.  I'm pleased that, during my
tenure, I've enjoyed a close working relationship with Dee
Harris, Mark Griffin, Denny Crawford, Phil Feigin, and Neal
Sullivan.  Our staffs have also worked together well.  And yet,
to be strong, our alliance must be not merely personal, but
professional;  our friendship should be based not on the
temperament of our leaders, but on the culture of our
organizations.

We've established strong individual relationships -- we need to
follow up with a strong institutional relationship.  In addition
to the 19c meetings, we once had regular meetings led on our side
by Commissioner Rick Roberts, but after Rick left, we were too
short-handed to replace him.  Now that we have four
Commissioners, I'm pleased to announce that these regular state-
SEC meetings will resume under Commissioner Isaac Hunt, who is
with us today and will act as liaison for the states at the
highest levels of the Commission. 

One other area in which much progress has been made, independent
of any legislation, is in the CRD redesign.  I applaud NASAA and
the NASD for their hard work on this.  The issue of how much
information an investor receives about the complaint history of
her broker is complex -- it pits an investor's right to know who
she is dealing with against a broker's right to due process. 
Adding to the difficulty are 50 separate record retention and
sunshine laws.  It has taken great patience, but I believe the
compromise you've worked out is a fair one.  Investors and
regulators will soon have access to more information on
arbitrations and lawsuits, but unsubstantiated, unpursued
complaints will come off the CRD after two years. 

Also on the horizon is NASD-R President Mary Schapiro's plan to
make broker disciplinary records available to investors on the
Internet.  I applaud this initiative and look forward to
establishing links among the World Wide Web sites of the SEC,
NASAA, and NASD.

Everything I've mentioned so far, indeed everything we've done,
we've done ourselves, without thunderbolts from Capitol Hill.  We
can -- we will -- and we must work together, with or without new
legislation.  But we must be realistic.  There is still a chance
that this legislation will become law.

If so, what changes will the new law bring?  How can we best
prepare?  

Obviously, state legislation will be needed to conform to and
implement the changes Congress makes.  But that is among the
least of the challenges we face.

If the Senate's provision on investment advisers remains in the
bill, you will have exclusive responsibility for regulating
investment advisers with assets below $25 million.  At the same
time, you face a challenge in retraining some of your corporate
reviewers to be examiners.  I want you to know that we are
willing to work with you here in any way possible, in any way you
need.

Nor is this a one-way street.  Rest assured that although your
regulatory role in the mutual fund area will be changed, we will
continually seek your input and advice on the measures we take.

Whatever the concrete results of this legislation, some
philosophical questions have been settled.  Let me close with a
few personal observations about the bill.

The first is that this legislation, in its current form, is a
strong endorsement of the role of the state regulators.  The
United States Congress has spoken, and it has confirmed the
crucial role that you play.  In acting to divide our
responsibilities more rationally, the members of Congress have
placed their full weight and support behind what you do each and
every day.  

Without question, they know the importance of the local cop on
the beat; 

Without question, they support your role in protecting American
investors; 

Without question, they have recognized that the states remain
uniquely positioned to police sales practices at the local level; 


Without question, they have defended your role in deciding who
will have the privilege of doing business in your state; 

And without question, they have vindicated your role in reviewing
corporate offerings most likely to be troublesome.

Some have said that this legislation is not the end, but just the
beginning.  I don't believe that to be the case.  Quite the
opposite:  I believe that passage of this bill will end the
national debate on pre-emption for many years to come.  The issue
has been decided, and your role has been validated.  

And to any who would further strip back your role or mine, let me
say that to do so would be to approach the point where instead of
eliminating duplication, we risk eliminating investor protection.
That is something you and I will never accept.  I will do
everything in my power to protect your role as the local cop on
the beat.  I will fight to ensure that your efforts are
adequately funded.  I will go the distance to see that you have
the tools you need to protect investors.  In short, I will do
everything I can to make this legislation the final chapter of
this debate, and not merely the prologue.  

My friends, we've come a long way in the last year.  By engaging
in a dialogue with Congress and participating in the process
we've influenced this bill for the better.  But the time has now
come for us to disengage from legislative battles and get back to
our real job -- protecting investors.  I hope that a good bill
comes out of conference, and that it's over with this year.  But
whether Congress acts or not, we will act -- to eliminate
duplication;  to enhance cooperation;  and to ensure investor
protection.  Thank you.
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