State securities regulators made a last-ditch plea late Thursday to the U.S. Securities and Exchange Commission, urging the agency not to erode their power to police certain smaller public stock offerings.

A December 12 letter to SEC Chair Mary Jo White from the North America Securities Administrators Association comes as the SEC prepares to propose new rules as early as next week that are designed to help start-up companies raise larger sums of capital without big regulatory costs.

State regulators fear the proposal will also ease requirements that companies register these offerings with the states, which they say could hurt their ability to detect fraud and protect mom-and-pop investors.

"We urge you, in the strongest terms, to resist calls to pre-empt the states," NASAA President Andrea Seidt said in the letter.

"State-level review will help the commission root out fraud and abuse in this new marketplace and will give investors confidence that securities sold in these offerings are subject to an adequate level of scrutiny," she added.

The SEC's pending proposal stems from a requirement in the 2012 Jumpstart Our Business Startups (JOBS) Act that relaxes federal securities laws to help small businesses raise money.

The JOBS Act requires the SEC to amend outdated rules known as "Regulation A."

Regulation A allows companies to raise up to $5 million through public deals without registering the securities with the SEC. However, they generally still have to register the securities in every state where they are sold.

Critics say this can create roadblocks and extra cost burdens for companies because every state enforces its own "blue sky" securities laws.

In addition, some states have tougher requirements and conduct "merit" reviews of stock offerings, a tool that gives those states the ability to block deals from being sold.

These regulatory burdens, as well as the low fundraising cap of $5 million, have likely contributed to the decreasing use of Reg A by companies and led many legal experts to agree it is time for the SEC to bring its rules up-to-date.

In 2011, there were only 19 Reg A deals compared with 116 in 1997, according to a July 2012 report from the Government Accountability Office.

The JOBS Act requires the SEC to raise the threshold on how much can be raised to $50 million to encourage more deals.

And to remedy concerns about regulatory burdens, the JOBS Act allows the SEC to pre-empt state oversight of such deals if they are offered on a stock exchange or if the deals are only sold to sophisticated, "qualified" purchasers.

The law gives the SEC the flexibility to define who counts as a qualified buyer.

Some members of Congress want the SEC to craft the rules in a way that would protect more deals from the multitude of state laws. State regulators, on the other hand, do not want to lose their authority over the offerings.

In late October, NASAA came up with a compromise plan that would streamline securities registration requirements so firms would need to file paperwork only once for multiple states.

The idea is to let states keep oversight but encourage more Reg A deals by cutting the costs involved with registering an offering multiple times.

NASAA's Seidt pressed the SEC in the December 12 letter to incorporate this plan into the upcoming proposed rules.

"We urge you to consider the work we are doing to create a state-level review process that is efficient and practical," she said.