Bill to Limit State Regulators Delayed

Rep. Richard H. Baker (R-La.) agreed Thursday to postpone action on his bill to limit the power of state regulators in negotiating agreements with companies that break securities laws, indicating that he may be willing to compromise.

“I want to work this out,” Baker said, asking the House Financial Services Committee to postpone a drafting session for the bill until September. The measure was on the panel’s schedule for Thursday night.

Baker said he still wanted to maintain the primacy of the Securities and Exchange Commission in working out settlements with defendants that go beyond federal law. He said he would consider proposals that would ensure the SEC’s primacy and still allow state officials to prosecute wrongdoers.

Rep. Michael G. Oxley (R-Ohio), chairman of the Financial Services Committee, agreed to postpone the bill, which also would provide greater restitution to defrauded investors.

Democrats and many state officials said the bill would have prevented the $1.4-billion global settlement over alleged biased stock research negotiated by New York Atty. Gen. Eliot Spitzer, other state officials and the SEC with 10 securities firms.

Spitzer called postponement of the bill “an important victory for investors.”

Spitzer and state securities regulators contended that Baker’s bill would limit their ability to impose requirements that go beyond federal law, including returning money to investors and forcing violators to accept state supervision.

Christine Bruenn, president of the North American Securities Administrators Assn., said last week that the bill would “disarm the local cops on the beat” who are the first line of defense for defrauded investors.

Rep. Brad Sherman (D-Sherman Oaks), who planned to offer an amendment to strip the state provision from the bill, said he welcomed the postponement.

“I think we had the votes” to defeat Baker’s bill, he said, “but you never know. I’m glad that this is put off and that hopefully there’ll be enough attention from the public on this that it will be very clear that we need robust securities enforcement.”

Also Thursday, the House approved a record $841.5-million spending bill for the SEC to bolster enforcement and other regulatory actions in the next fiscal year.