Administrative record supporting final regulations (PDF)
Secretary Galvin Issues Orders Recognizing Accreditation Organizations Under New Regulations (PDF)
Notice is hereby given that the Secretary of the Commonwealth has adopted final regulations amending 950 CMR 12.200 (Registration of Broker-Dealer, Agents, Investment Adviser, Investment Adviser Representatives and Notice Filing Procedures for Federal Covered Advisers). The final regulations will be effective June 1, 2007.
Language of Final Regulations
The language below shall be included as 950 CMR 12.204(2)(i)[Dishonest and Unethical Practices in the Securities Business]:
(i) 1. Using a purported credential or professional designation that indicates or implies that a broker-dealer agent has special certification or training in advising or servicing senior investors, unless such credential or professional designation has been accredited by an accreditation organization recognized by the Secretary by rule or order. For the purposes of this subsection 12.204(2)(i), the term “senior investor” shall include a person 65 years of age or older.
2. In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a purported credential or professional designation indicating or implying that a broker-dealer agent has special certification or training in advising or servicing senior investors, factors to be considered shall include: (a) use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “chartered,” “adviser,”“specialist,” or like words in the name of the credential or professional designation; (b) how those words are combined; and (c) whether they are capitalized. Subsection 12.204(2)(i) is not intended to apply to job titles provided by a broker-dealer specifying one’s area of specialization within an organization unless the facts and circumstances associated with the provision or use of a job title indicate that it improperly suggests or implies certification or training beyond that which the titleholder possesses or that it otherwise misleads investors. It is also not intended to apply to job titles provided by a broker-dealer indicating seniority within an organization.
3. There shall be a grace period commencing on the effective date of subsection 12.204(2)(i) and running until two months after the date that at least one accreditation organization is recognized by the Secretary pursuant to subsection 12.204(2)(i)(5). In addition, there shall be a sixth month grace period with respect to any credential or professional designation that has been submitted to an accreditation organization described in subsection (1) above for accreditation, running from the date of such submission; provided, that the Secretary may, at his discretion (consistent with the public interest and protection of investors), increase such grace period by an additional period of up to twelve months upon a showing of substantial progress in the accreditation process and a showing that such additional time is needed to complete the accreditation process; however, if accreditation of such credential has been denied in a final decision of such accreditation organization, any grace period provided for in this subsection shall terminate on the date of such denial.
4. Subsection 12.204(2)(i) shall not apply to a degree or certificate evidencing completion of an academic program at an accredited institution of higher education unless the facts and circumstances associated with the provision or use of such degree or certificate indicate that it improperly suggests or implies certification or training beyond that which the degree holder or certificate holder possesses or that it otherwise misleads investors.
5. The Secretary may recognize any accreditation organization by rule or order. The Secretary shall consider any request for recognition by an accreditation organization. In determining whether to recognize an accreditation organization, the Secretary shall consider, among other factors that the Secretary deems appropriate in his discretion, whether or the extent to which the accreditation organization is nationally recognized and independent, whether it is for-profit or nonprofit, whether the primary purpose of the organization is to develop standards and implement methods for assuring competency and whether the organization has standards to address the status of designees who obtained the credential or designation prior to accreditation. The Secretary shall maintain a readily-accessible list, with contact information, of all accreditation organizations he recognizes.
The language below shall be included as 950 CMR 12.205(9)(c)(15)[Dishonest and Unethical Practices in the Securities Business]:
15. a. Using a purported credential or professional designation that indicates or implies that an investment adviser representative has special certification or training in advising or servicing senior citizens, unless such credential or professional designation has been accredited by an accreditation organization recognized by the Secretary by rule or order. For the purposes of this subsection 12.205(9)(c)(15), the term “senior citizen” shall include a person 65 years of age or older.
b. In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a purported credential or professional designation indicating or implying that an investment adviser representative has special certification or training in advising or servicing senior citizens, factors to be considered shall include: (1) use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “chartered,” “adviser,”“specialist,” or like words in the name of the credential or professional designation; (2) how those words are combined; and (3) whether they are capitalized. Subsection 12.205(9)(c)(15) is not intended to apply to job titles provided by an investment adviser specifying one’s area of specialization within an organization unless the facts and circumstances associated with the provision or use of a job title indicate that it improperly suggests or implies certification or training beyond that which the titleholder possesses or that it otherwise misleads investors. It is also not intended to apply to job titles provided by an investment adviser indicating seniority within an organization.
c. There shall be a grace period commencing on the effective date of subsection 12.205(9)(c)(15) and running until two months after the date that at least one accreditation organization is recognized by the Secretary pursuant to subsection 12.205(9)(c)(15)(e). In addition, there shall be a sixth month grace period with respect to any credential or professional designation that has been submitted to an accreditation organization described in subsection (a) above for accreditation, running from the date of such submission; provided, that the Secretary may, at his discretion (consistent with the public interest and protection of investors), increase such grace period by an additional period of up to twelve months upon a showing of substantial progress in the accreditation process and a showing that such additional time is needed to complete the accreditation process; however, if accreditation of such credential has been denied in a final decision of such accreditation organization, any grace period provided for in this subsection shall terminate on the date of such denial.
d. Subsection 12.205(9)(c)(15) shall not apply to a degree or certificate evidencing completion of an academic program at an accredited institution of higher education unless the facts and circumstances associated with the provision or use of such degree or certificate indicate that it improperly suggests or implies certification or training beyond that which the degree holder or certificate holder possesses or that it otherwise misleads investors.
e. The Secretary may recognize any accreditation organization by rule or order. The Secretary shall consider any request for recognition by an accreditation organization. In determining whether to recognize an accreditation organization, the Secretary shall consider, among other factors that the Secretary deems appropriate in his discretion, whether or the extent to which the accreditation organization is nationally recognized and independent, whether it is for-profit or nonprofit, whether the primary purpose of the organization is to develop standards and implement methods for assuring competency and whether the organization has standards to address the status of designees who obtained the credential or designation prior to accreditation. The Secretary shall maintain a readily-accessible list, with contact information, of all accreditation organizations he recognizes.
Comments from the Society of Certified Senior Advisors, Inc. (PDF)
Comments from the Public Investors Arbitration Bar Association (PDF)
Dear Bryan J. Lantagne,
Thank you for your communication regarding Spurious Senior Designations.
I will not be able to attend the hearing but wish to let you know that I am in favor of the proposed legislation which would protect the seniors of our Commonwealth when seeking investment advice, or purchasing/selling securities.
Sincerely,
Joanne Collins
Director Woburn Council on Aging
Monday, April 23, 2007 1:10 PM
To the Massachusetts Securities Division:
I am so glad to see some regulations put on these vendors. It is such an important issue and so often it is difficult to pursue credentials for financial planners, etc. who are not in one's own city or town. At the South Hadley COA, we are very sensitive to who comes to our Senior Center to speak and basically only have agents who have a good reputation locally. Seniors are at such a high risk in this regard especially if someone tries to sell a "get rich quick program." Again, thank you for being proactive on behalf of Massachusetts seniors!!! So far there have been no problems as a result of speakers at the Senior Center. However, there are have been a couple of instances where seniors went to other financial planners and some questions came up later.
Sincerely,
Joanne Trybus, Director
South Hadley COA
Monday, April 23, 2007 1:10 PM
Comments from the Investment Management Consultants Association (PDF)
Monday, April 23, 2007 2:02 PM
Dear Mr. Lantagne,
I am greatly in favor of the proposed regulations regarding implied accreditation recognized by the Secretary of the Commonwealth in senior financial matters.I feel this is a matter of growing concern. Often times, seniors do not check with the office of the Secretary and take these organizations at their word. Marketing tools are not always straight forward and the seniors need this added protection. I sincerely appreciate this initiative taken up by the Massachusetts Securities Division.
Ruth Gately
Director
Waltham Council on Aging
Tuesday, April 24, 2007
Comments from the Commonwealth of Massachusetts' Office of Consumer Affairs and Business Regulation (PDF)
Tuesday, April 24, 2007
Comments from the Elder Services of the Merrimack Valley, Inc. (PDF)
Tuesday, April 24, 2007
Comments from the Life Insurance Association of Massachusetts (PDF)
Thursday, April 26, 2007 2:22 PM
Follow-up Comments from the Life Insurance Association of Massachusetts (PDF)
Tuesday, April 24, 2007 4:16 PM
I am in favor of regulations that require any broker-dealer agent or investment advisor representing expertise or credentials to beacredited by arecognized organization that has specific training in the field they claim to have expertise. I am also in favor of the same requirement for Elder Law Attorneys. Currently, it seems all they have to do is pay dues and they can have their name of the list.
Barbara A. Search
Director
Sturbridge Council on Aging
Thursday, April 26, 2007 2:01 PM
Dear Secretary Galvin:
The Financial Planning Association (“FPA”) applauds the Division’s efforts to protect senior investors from misleading designations and appreciates the opportunity to provide comments on proposed regulations relating to senior financial designations. Attached is the comment letter submitted by FPA in response to the Division’s fall 2006 rule proposal. FPA supports the proposed amendments; however, FPA urges the Division to coordinate its efforts with the North American Securities Administrators Association (“NASAA”) and the NASAA task force that is working to create a model rule regarding the use of senior designations. FPA believes that a state-by-state approach to this issue would be confusing and create administrative difficulties; therefore, FPA strongly encourages states to work together and with affected industry groups to create a uniform approach to this complex issue. FPA also reiterates its concern that the Securities Division should work jointly with the Division of Insurance to mandate rules relating to the sale of insurance products to achieve the most comprehensive and meaningful effect on consumer protection.
Should you have any questions, please contact me.
Sincerely,
Robert Neill
Robert H. Neill Jr., Esq.
Assistant Director of Government Relations
Financial Planning Association
2006 Comment from the Financial Planning Association (PDF)
Thursday, April 26, 2007 3:20 PM
Comments from the Pension Action Center of the University of Massachusetts Boston (PDF)
Thursday, April 26, 2007 9:26 PM
Comments from the Society of Financial Service Professionals (PDF)
Thursday, April 26, 2007
Comments from the Northwestern Mutual Life Insurance Company (PDF)
Friday, April 27, 2007
Comments from the Massachusetts AARP (PDF)
Friday, April 27, 2007 10:28 AM
To: William F. Galvin, Secretary of the Commonwealth
Fr: Eric Bourassa, Consumer Advocate
Re: Testimony in Support of Proposed Regulation on Senior Financial Designations
The Massachusetts Public Interest Research Group (MASSPIRG) is a non-profit, non-partisan public interest organization that represents 50,000 members across the state and works on consumer protection, public health, and good government issues.
MASSPIRG supports the Secretary of the Commonwealth’s proposed regulation on senior financial designations by prohibiting a broker-dealer agent or an investment adviser representative from the deceptive promotion of unaccredited qualifications or designations in the advising of senor citizens.
A core tenet of consumer protection is to prohibit deceptive marketing that leads to rip-offs in the marketplace. Misleading marketing ploys that convince consumers that a product, dealer, or agent has passed a certification test or received official approval, and in turn are held to a higher standard, are deceptive and should be prohibited when they lack a true basis of accreditation.
MASSPIRG applauds the Secretary’s proposed regulation and hopes it is adopted.
Friday, April 27, 2007 10:55 AM
Dear Secretary Galvin,
I appreciated the opportunity to provide verbal testimony on April 24, 2007, regarding the value of accreditation of personnel certification agencies. The session was very informative. After discussion with your staff, I decided to submit further written testimony.
Anyone in the United States can develop a personnel certification program. In fact, over 3,000 agencies in this country say they “certify” individuals to perform a job. However, there are currently no governmental standards or requirements that provide for the evaluation and quality control of organizations operating personnel certification programs. The only current mechanism to identify if a certification body meets some nationally generally accepted standards/requirements is if the agency has undergone third-party evaluation and has been accredited. Increasingly, credentialing organizations seek third-party accreditation in order to enhance the credibility, quality and competitiveness of the programs they offer.
At times, agencies that refer to themselves as a “personnel certification body” really have what most professionals in the field of credentialing would call a “certificate” program. Although certificate programs are often times appropriate for use in determining qualifications for a job/profession, they should not be confused with certification programs. They are very different and care should be taken in defining “certification”.
The following are some generally accepted characteristics of a “Certificate Program” and a “Certification Program”:
CERTIFICATE PROGRAM
CERTIFICATION PROGRAM
I hope this clarification is informative and I would be pleased to amplify this issue further if that would be helpful.
Respectfully Submitted,
Roy A. Swift, Ph.D.
Program Director
Personnel Certification Accreditation Program
American National Standards Institute
Friday, April 27, 2007 1:04 PM
Comments from the Securities Industry and Financial Markets Association (PDF)
Friday, April 27, 2007 3:25 PM
Comments from the Financial Services Institute, Inc. (PDF)
Friday, April 27, 2007 3:42 PM
Comments from the Pace Investor Rights Project and the Securities Arbitration Clinic (PDF)
Friday, April 27, 2007 4:15 PM
Comments from Wachovia Securities, LLC (PDF)
Friday, April 27, 2007 4:30 PM
Comments from the Massachusetts Attorney General's Office (PDF)
Friday, April 27, 2007 4:45 PM
Comments from FIdelity Investments (PDF)
Friday, April 27, 2007 4:50 PM
Comments from the Center for Insurance Research (PDF)
Friday, April 27, 2007 4:52 PM
Comments from Dr. Jesse Arman VP of Academic Affairs for the College of Financial Planning (PDF)
Tuesday, May 01, 2007 12:46 PM
Dear Mr. Lantagne,
As Director of Elder Services for the Town of West Bridgewter I would like to express my appreciation for your efforts to help protect Senior Citizens from being taken advantage of by yet another fraction of society. I'm sure we are all aware that the hot new property in our country is the growing number of senior citizens. Presenty, I am planning a public forum at the senior center at the request of the Plymouth County Registrar of Deeds John Buckley. Reg. Buckley is coming to address my senior citizens on yet another new avenue devised to take advantage of them. Apparently, there are now companies who are charging seniors large fees for obatining copies of "very important documents" ie. the deeds to their homes and other publlic documents. Reg. Buckley wants to make my seniors aware of what actual fees should be incurred.
The human mind is amazing in it's ability to develop senarios whereby they can take advangtage of another person. If you would like to have a speaker from your office or provide me with some printed materials for the event I would love to pass them on to the seniors. This would be a small event of approx. 100 people held during the day at 11:00 a.m. on a Wed. or Thurs. in May.
Thank you,
Mary H. Graf
Director of Elder Services
West Bridgewater, MA
Comments from Isaacson Rosenbaum P.C. (PDF)
Dear Secretary Galvin:
The American National Standards Institute (ANSI) applauds your efforts to enact regulations that would protect the public from financial designations that are not credible or may even be deceptive to seniors.
It has been estimated that there are over 3,000 organizations that describe themselves as certification programs, yet few of them actually meet nationally or internationally accepted certification standards. Recognizing accreditation by ANSI or others that rely upon a national standard or an internationally accepted standard for accreditation (ANSI/ISO/IEC 17024) is certainly one of the best methods for protecting the public in these matters. At least, the public will have a clear understanding of what requirements/standards the agency has met and has been attested to by an independent third party accreditor.
We hope that other states will follow your lead.
Sincerely,
Lane Hallenbeck
Vice President
Accreditation Services
American National Standards Institute
Comments from the Financial Services Institute (PDF)
Comments from the Society of Certified Senior Advisors, Inc. (PDF)
Comment from National Organization For Competency Assurance (PDF)
Comment from Centre for Financial Market Integrity (PDF)
Comment from Financial Planning Association (PDF)
Dear Secretary Galvin,
I applaud your efforts to stop the proliferation of bogus senior credentials that are marketing fronts and lack substance.
We urge that such regulation:
Thank you,
Larry Klein, CPA/PFS, CFP®
Certified Retirement Financial Advisor™
President
Society of Certified Retirement Financial Advisors
1700 N. Broadway, Suite 405
Walnut Creek, CA 94596
888-880-2732
Comments from Securities Industry and Financial Markets Association (SIFMA) (PDF)