With its finite resources, the
SEC
can’t directly supervise every broker, adviser, and corporation that issues securities. Furthermore, state law enforcers can pursue criminal prosecutions, while the SEC is limited to civil and administrative actions and referring criminal matters to the Justice Department. So individual states often collaborate with the SEC and
self-regulatory organizations (SROs) to regulate the securities industry within state borders.
While there is cooperation, there can also be differences of opinion over jurisdiction, as there sometimes are with other overlapping law enforcement or banking bodies. Regulators might hold different opinions about how best to address problems.
For example, a state regulator might believe that criminal prosecution is the best way to protect investors and punish violators, while the SEC might favor working with firms and exchanges to achieve a financial settlement. In the end, though, all regulators are focused on investor protection, even if they disagree about how best to achieve it.
