AUGUSTA – Congress is considering a proposal pushed by some investment banking companies that Maine officials say would cripple efforts aimed at regulating those firms.

Several of the nation’s most prominent securities firms paid fines totaling $1.4 billion this spring after several states initiated actions against them

“I think it is absolutely clear this would cripple enforcement efforts,” Christine Bruenn, Maine Securities administrator and president of the National Association of Securities Administrators said Friday. “This committee action Thursday goes beyond what was being discussed and would hurt consumers if it became law.

The proposal is part of legislation that would increase the enforcement powers of the Securities and Exchange Commission, the federal agency charged with regulating the investment industry. Bruenn said she supports many of the provisions of the proposal, but rejects the idea of taking away the concurrent responsibilities of the states to regulate the industry.

“We are the local cops on the beat,” she said, “we are talking with the victims every day and working with them. This would take away our ability to help these victims.”

Over half of all Mainers own some form of securities directly or indirectly, according to industry estimates. Often those securities are part of a retirement fund an individual has established or is part of one established by their employer

Linda Conti, Director the Consumer Protection Division of the Maine Attorney General’s office, said last week that the effort in Congress is part of a strategy by regulated industries across the country to ‘nationalize’ enforcement efforts.

“That’s because they know the federal agencies will not be aggressive in taking the side of the person calling up on the phone with a complaint,” she said. “They hate us at the state level because we will actually sue them, at least occasionally.”

Rep. Richard Baker, R-La, sponsored the legislation. He argues the persons who have been the victim of stock fraud should be the ones to benefit from any enforcement action, not government. He would have all the money go to the SEC and then be distributed by that agency to the victims of the fraud.

Bruenn said she agrees restitution should be made when possible and pointed to the record in Maine. From July 1, 2002, through May 31, 2003, her office returned over $2.8 million to Mainers who had been the victims of fraud, while collecting $16, 000 in fines that went into the state coffers.

“But, in the Merrill Lynch settlement, we had no way to easily determine who was defrauded because the activity was so pervasive,” she said. “So in the negotiations, we opted to go for fines and corrective measures.”

That settlement brought $4.1 million to Maine’s general fund from the $1.4 billion collected from the brokerage firms.

The proposal faces opposition in the House. Rep. Michael Michaud, D-Me., said in a statement that while he supports providing restitution to victims, he does not support taking away the concurrent jurisdiction of the states to police securities fraud.

“While I applaud the effort to deter securities laws violations and bolster the ability of the Securities and Exchange Commission to prosecute these crimes, I do not support barring or by-passing the states when it comes to levying fines for this kind of criminal behavior,” Michaud said.

Bruenn said while the measure may garner enough support to pass the House, she hopes the Senate will not support the measure.

Because neither Maine Senator serves on the Senate Banking Committee, their spokeswomen said that they have not reviewed Rep. Baker’s proposal and are not ready to comment on the legislation.