U.S. state securities regulators touted the importance of their role in protecting investors, in testimony before the U.S. Senate Banking Committee today.

“State securities administrators share a common passion for protecting citizens from investment fraud and abuse,” said Ralph Lambiase, director of the Securities Division of the Connecticut Department of Banking and president of the North American Securities Administrators Association Inc. NASAA, which bills itself as the oldest international organization devoted to investor protection, consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, Canada, and Mexico.

Lambiase stressed to the Committee that state securities regulators are committed to working with the Securities and Exchange Commission and self-regulatory organizations to protect investors and cited the success of the research analyst cases of 2002-2003 and the more recent investigations of the mutual fund industry as evidence of the complementary state/federal regulatory system.

“These collaborative efforts have helped and continue to help restore investor confidence in our financial markets,” he said. “Protecting investors is a significant challenge and no single regulatory agency can go it alone. When it comes to investigation and enforcement of securities wrongdoing — Investors are demanding more cops on the beat, not fewer.”

Lambiase urged the Committee to reject proposals to preempt state regulatory authority. “Protecting investors against fraud and punishing those who would commit fraud are fundamental roles of government, be it federal, state, or provincial,” he said.

Joseph Borg, Alabama Securities Director and chair of NASAA’s Enforcement Section, told the panel that states have compiled an impressive record in bringing enforcement cases, including criminal prosecutions. Based on preliminary results of a NASAA survey for the 2002-2003 reporting period, states filed a total of 2964 administrative, civil and criminal enforcement actions; assessed US$822.3 million of monetary fines or penalties; collected US$660.1 million in restitution, rescission and disgorgement and sentenced criminals to more than 717 years of incarceration.

“State securities regulators are dedicated to pursuing those firms and individuals who have violated the securities laws,” Borg said. “We will fight to ensure that state securities regulators maintain the authority to regulate at the local level and bring enforcement actions with appropriate remedies against those firms that violate securities laws in their jurisdictions.”