Following the Securities and Exchange Commission’s (SEC) vote to finalize a rule expanding an exemption allowing businesses to raise up to $50 million from the public markets, six leading Democratic lawmakers on the Financial Services Committee expressed concern with the consequences of preempting critical investor protections at the state level.

Led by Congressman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee and Congressman Stephen Lynch (D-MA) the members voiced their disappointment with the rule, known as Regulation  A+. They were joined by Reps. Carolyn B. Maloney (D-NY), Ranking Member of the Subcommittee on Capital Markets and Government Sponsored Enterprises, Michael E. Capuano (D-MA), Rubén Hinojosa (D-TX), and Denny Heck (D-WA).

They released the following statement:

“It is disappointing that the Securities and Exchange Commission has ignored concerns expressed repeatedly by Democratic lawmakers and moved forward with a rule that will undermine critical investor protections with an unjustifiable preemption to state regulation.

When Congress passed this provision, we expressly rejected the preemption of state regulators because they have vital expertise in policing smaller offerings. Moreover, nearly every state has implemented a coordinated oversight program, which balances the need to protect investors from bad actors with expeditious review and valuable feedback for companies.

We believe today’s vote is in direct contravention of Congressional intent, and may ultimately make American workers, investors and retirees more susceptible to fraud and other schemes.”

Waters and Lynch have been outspoken on the issue of state preemption. In December of 2014, the two lawmakers called on the SEC to study the situation, and cautioned against a rule that would “undermine crucial investor protections by preempting the states’ regulators.” This followed a June letter from Waters, Lynch and 18 other members, which articulated “serious concern about the sweeping preemption of state law” proposed by the SEC as part of the regulation.

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