August 7, 2009
Dear Sir or Madame
I am an independent, third-party marketer who would be very adversey affected by this proposal in it's current form.
I have not done anything wrong, and, although I do have some municipal clients presently, I have not ever once in my lifetime, or career, made any political contributions.
In all due respect and deference, I do believe that this proposal is "killing a fly with a shotgun", and, though very well intentioned, as they say, "the road to Hell is paved with good intentions". I do not believe that you are considering adequately the consequences of this proposal as it stands presently.
First, please be aware that no legitimate independent, third-party representative as my firm is, has any issues with full disclosure. Speaking only for myself, I have no disagreement with the highest levels of disclosure, registration, or prohibitions on political contributions. I actually would strongly WELCOME any and all of these proposals.
Please be aware, however, that the actions which have precipitated these proposals ( the New York bribery scandals, etc.), were not committed by registered, licensed solicitors. These were all illegal activities even under current regulations. In my case, in each and every single case where I represent my investment managers, I must provide a very detailed "Disclosure Statement" to the client, detailing my relationship with this manager, and, exactly what my compensation arrangement is with this manager, etc. I am legally required to pass a Series 65 Licensing Exam, and, to be registered as a Registered Investment Advisor. None of the perpetrators of the above referenced scandals were licensed or registered in this way.
Separately, all of the investment management firms that I represent are smaller, emerging, "woman or minority-owned" firms. These firms cannot typically afford to hire an internal marketing/sales person, and, as such, they typically work with a firm such as mine for these services. If these proposals go through as suggested, the only investment and Wall Street firms who will be able to compete for business effectively, will be large, established firms, who can afford to pay salaries, benefits, and expenses for their own internal sales staffs. My guess is that if groups like the Rainbow Coalition and the American Civil Liberties Union were to become aware of these proposals, and, how the consequences would fall disproportionately upon woman and minority-owned firms, that they would express the same concerns as I am sharing with you here. It would be surprising to me, also, to have the current addministration seeking to stifle diversification of investment management services, to the benefit of the larger Wall Street firms, particularly in light of the damages that concentration of power in this industry has wreaked upon the global economic scene in recent years. It would seem to me, at least, unconstitutional, for a sub-set of the population to have their legitimate livelihoods devastated by a change in regulation. My guess is that since this sub-set ( legitimate, registered, licensed representatives) were not responsible in any way for the causes of this proposal, that, there would be strong basis for legal remedy/class action suit, to recover the irreparable harm that this proposal, in its current format, would cause to legitimate, tax-paying business people, as a group.
I also believe that this proposal will drive many current businesses like mine, completely out of business, at a time that there are no jobs for people to go to. I believe that this proposal will cause employees of these firms to be thrown out of work at the most inopportune time imaginable presently.
In summary, while I understand the feeling for the need to do something, I do believe that this proposal is very much a case of "throwing the baby out with the bathwater". I would strongly support tighter enforcement of disclosure, licensing, and, prohibitions of political contributions by investment managers - I believe that these would all be strong positives going forward.
My suggestion to you would be KEEP the proposed prohibition on political contributions of any kind in its current format. I would further suggest that all independent representatives ( solicitors) need to provide the types of disclosure that I already provide, and, also, to be licensed and registered ( as most already are).
The proposal in its current format would be financially ruinous and malicious towards law-abiding, registered, licensed representatives that serve a very valuable purpose in our society, representing those least able to compete against the Wall Street behemoths. Politically, at this point in time, I cannot imagine that this would be taken very well by the American people as a whole, if the press were to get hold of this story. Please remember that in my case ( which is common), ALL of the investment managers that I represent are all law abiding, licensed, registered WOMAN AND MINORITY-OWNED firms, who will have no one to represent them or market them if your proposal passes in its current form. You will have effectively shut not only my shop down, but, destroyed their firms as well.
Your proposal in its current format is very much favoring large Wall Street firms and banks, and is destructive to worthy smaller, emerging, firms.
There is no reason or rationale for the harsher terminology in this proposal. You are putting criminals and law abiding citizens in the same group - this is grossly unfair, and, even the fear of this proposal being discussed is slowing down business ( i.e. financial damages are being felt already).
I would sincerely request that you reconsider the most destructive aspects of this proposal, as, the consequences to me and many others would be extremely grave, even though we were not responsible for the illegal activities that occurred.
Claude R. Parenteau
Parenteau Associates, LLC