United States Capitol, Washington DC

U.S. state securities regulators warned Congress on Tuesday against weakening investor protection in the response to the Covid-19 pandemic.

Speaking at a meeting of the House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, the head of the North American Securities Administrators Association (NASAA) advised lawmakers to reject efforts to weaken investor safeguards.

NASAA president Christopher Gerold told the committee that Congress “should be very skeptical” of proposals that aim to use the pandemic as justification for softening securities laws.

“It is important to remember that neither the securities laws nor the functioning of the capital markets is the root cause of the present economic distress,” he said.

“Prior to the pandemic, the securities laws and our capital markets were serving their intended purposes — the protection of investors and allocation of investment capital. This has remained true during the height of pandemic and remains true today,” Gerold said.

Instead of weakening investor protections, Gerold argued that Congress should seek to expand disclosure to investors from public companies; resist efforts to expand retail investor access to exempt markets; and push for increased transparency in private markets.