(38) What Congress finally enacted in NSMIA, however, was far short of complete preemption of states' registration authority.
The debates and adoption process leading to the 1996 enactment of NSMIA turned out to be a precursor of the future relationship between state and federal regulators.
So, you might ask, didn't NSMIA create a national de minimis exemption from investment advisor registration?
NSMIA undoubtedly simplified the regulatory interplay between the SEC and the states, but the de minimis standard is but one example of how the states can and have asserted their independent authority.
passed, hedge fund assets increased tenfold to $1.2 trillion within seven years, and they have doubled again since then.
Notwithstanding the significant impact of these preemptive enactments by Congress upon the states and state courts, the role of the states remains important, even in a post-NSMIA regulatory era, because NSMIA
's preemption of state regulation was not complete.
may also be seen to have created a null preemption that goes beyond the bounds of the statutory and regulatory exemption for transactions not involving private offerings.
eliminated the second part of the test (having more than 10% of the investor's assets invested in section 3(c)(1) funds generally) and amended the first part of the test (being a 10% + investor in a particular section 3(c)(1) fund) to apply only if the 10%+ investor is a registered or private fund excepted from the definition of investment company under sections 3(c)(1) or 3(c)(7).
(21) However, in 1996, Congress passed the NSMIA
, preempting certain blue-sky laws that had previously coexisted with federal regulation and leaving federal law as the premier governing law of securities transactions.
The most important federal constraint on state action is perhaps the National Securities Markets Improvement Act of 1996 (NSMIA
), which fixed the SEC's role as the regulator of offerings of nationally traded securities and securities of registered investment companies.
Campbell, The Impact of NSMIA
on Small Issuers, 53 Bus.
The effect of this recent law--the National Securities Markets Improvement Act of 1996 (NSMIA
)--on private placements in Florida is illustrated by the following hypothetical: