Illinois Agencies Challenge SEC Regulation

Ramped-up regulations proposed by the Securities and Exchange Commission are supposed to help prevent another financial meltdown, but government agencies in Illinois are fighting one proposal they allege would do more harm than good.

The measure would require volunteers on state and local boards that make financial decisions to register as "municipal advisors." The idea is to increase SEC oversight on people with a say over taxpayer dollars. The SEC says appointed board members should register because they are not directly beholden to voters.

Protesting cities from Illinois include Champaign and Peoria, as well as state universities like Western, Northern, Illinois State and the University of Illinois. The Illinois Finance Authority is also against the change. That agency's Bill Brandt said unpaid board members already get oversight - from Illinois' governor, Attorney General, and annual audits.

"Now you have the federal government trying to someone how intervene in that, which is a real constitutional question," Brandt said. "I'm all for federal regulation of the markets. But I'm not sure neither the governor nor the legislature of Illinois are really anxious to have all of their decisions reviewed by a federal agency that otherwise has no bearing on what Illinois does to bring jobs into the state."

Brandt also said the SEC's proposal would drive away qualified people with investment expertise, who are volunteering out of a commitment to public service. He said many won't participate if they have to pay to register, take ongoing classes, disclose their personal finances and be exposed to increased liability.