House Democrats: SEC Vote to Preempt State Investor Protections “Disappointing”
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.
“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.
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.