The North American Securities Administrators Association (NASAA) is calling on the U.S. Securities and Exchange Commission (SEC) to back away from plans to expand retail investor access to exempt markets.

In a filing with the SEC, NASAA, a group of state and provincial securities regulators, said that the commission shouldn’t pursue its proposal to expand retail investor access to private securities offerings without introducing added investor protections and oversight.

NASAA argued that the SEC’s proposal to amend its “accredited investor” definition to enable broader participation in private offerings may be acceptable for certain organizations, but that it falls short when it comes to retail investors.

“The proposal is a deregulatory effort that is singularly focused on expanding the private markets while showing little regard for its potential adverse effects on retail investors and the public markets,” said Christopher Gerold, president of NASAA and chief of the New Jersey Bureau of Securities, in the submission.

NASAA recommended that the SEC raise the income and net worth thresholds for individual investors to be considered “accredited investors,” noting that these thresholds haven’t been revised for 40 years.

When they were initially adopted, approximately 1.6% of households qualified, but that’s up to 13% now.

“It is implausible that 16 million American households currently have both the financial sophistication and the capacity to bear the kinds of investment losses that courts and prior commissions have considered essential prerequisites for participation in private offerings,” Gerold said.

In particular, NASAA is concerned that senior investors may meet the income and net worth thresholds through their retirement saving efforts, but that these assets should not be exposed to risky private offerings.

“The proposal does nothing to protect these investors,” Gerold noted.

NASAA said the thresholds should be raised significantly, modified to exclude agricultural and retirement assets, and indexed to inflation.

It also recommended that the SEC study private offerings to individual investors “to better understand the types of companies and investors that reasonably should be dealing with one another.”