State securities regulators have hired a former Securities and Exchange Commission lawyer to help them win a rare and high-stakes jurisdictional dispute with the SEC.

The North American Securities Administrators Association, or NASAA, recently tapped former SEC enforcement lawyer Tom Sporkin to help respond to an SEC proposal on small public stock offerings that the state group says defies the will of Congress, exceeds the SEC's authority and reduces state policing powers.

Sporkin, a partner at BuckleySandler LLP in Washington, spent nearly 20 years at the SEC, including a stint as director of the Office of Market Intelligence, a triage center for handling the SEC's tips and complaints.

"He has good experience understanding the inner workings" of the SEC, NASAA President Andrea Seidt said in an interview. "We certainly value his input. He is helping us solidify our thinking."

State regulators frequently clash with lawmakers to retain their jurisdiction, which has been scaled back before, but it is unusual for them to tussle with the SEC over jurisdictional issues so publicly.

The dispute centers on how regulators should oversee a type of small public stock deal known as a "Regulation A" offering. The deals are rarely used because companies can only use them to raise $5 million, and the offerings must be registered separately in every state where they are sold - often more effort than the relatively small amount of money is worth.

The SEC wants to raise that threshold to $50 million and exempt the deals from state registration laws so that more companies can use "Reg A" to raise new capital.

State regulators do not want to lose oversight authority of these deals due to concerns about fraud. Beyond that point, they say it would be against the law for the SEC to pre-empt state oversight.

"This is one of those rare occasions where the SEC has gotten a little out of synch with this rule," Sporkin told Reuters in an interview.

"I know that NASAA is committed to working with the Commission to revise the proposal in a way that will preserve this important partnership," he said.

"We look forward to reviewing all of the comments we receive on the proposal," said SEC spokesman John Nester.

The SEC's Regulation A proposal stems from the 2012 Jumpstart Our Business Startups, or JOBS Act, which relaxes securities rules to help companies raise money and go public.

NASAA has disagreed with many provisions of the JOBS Act, but this is the first time it has hired outside counsel to help it push back against a rule related to the law.

The law requires the SEC to increase the amount that Regulation A offerings can raise. But regulators were flummoxed over how to handle the patchwork of different "blue sky" state laws so that compliance costs would not cancel out the benefits to companies of raising more money.

NASAA has offered a solution. Last year, it said the states were developing a streamlined system that would let companies register offerings once, instead of in every state separately. But the SEC surprised the group by proposing that many of the Reg A deals would be removed from state supervision.

"It's not appropriate for the SEC at any time ... to exceed its statutory authority," Seidt said. "Pre-emption is not an option on the table."

The group's recent 17-page comment letter to the SEC, which Sporkin helped review, accuses the SEC of defying Congress.

It does not make a specific legal threat, but the letter references tactics used in previous challenges, such as asking whether the SEC weighed the costs and benefits of its proposal.

The letter also suggests that companies may be afraid of facing enforcement action from individual states if they try to sell unregistered shares there, even if the offering complies with SEC rules.

That could deter companies from issuing Reg A offerings, according to NASAA.

The state securities regulators' group plans to meet with SEC commissioners, including Chair Mary Jo White, and staff early next month, before the NASAA's public policy conference in Washington on April 8, to discuss its concerns.

Seidt said she was hopeful the matter could be resolved without resorting to litigation.

"Right now our perspective is partnering with the SEC in a productive, constructive way and hoping that it doesn't have to take a detour south," Seidt said.