States join forces in attempt to void federal investing rule
State officials in Montana and Massachusetts have joined forces in an attempt to void a new federal rule for public investment offerings.
The U.S. Securities and Exchange Commission decided in March to increase the amount that can be raised through certain public investment offerings from $5 million to $50 million and divide those registrations into two financial tiers. The rule limits oversight of the top tier to the federal agency.
Lawsuits from Montana Commissioner of Securities and Insurance Monica Lindeen and Massachusetts Secretary of State William Galvin were consolidated on Wednesday. Both ask a federal appeals court in the District of Columbia to toss out a rule the state officials say will keep states from regulating the larger investment options.
State and national securities organizations have opposed the rule, saying it pre-empts state review and violates congressional intent.
Montana Deputy Securities Commissioner Lynne Egan said it is in the public interest that the state should continue vetting offerings.
“We’re the local cops on the beat, and that’s why we filed the petition,” Egan said. “We want to ensure we remain there to protect Montanans who want to and should be investing their money.”
The rule will take effect on June 19 if it is not stalled.