Investor Protection and Capital Markets Fairness Act

Floor Speech

Mr. Speaker, I would like to recognize the gentleman from Utah (Mr. McAdams) and the ranking member of the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee, Mr. Huizenga, for their diligent efforts on this bipartisan bill.

This bill is the result of the Supreme Court's Kokesh decision, which restricted the SEC's disgorgement authority to 5 years.

SEC Chairman Jay Clayton almost never advocates for Congress to legislate on a particular issue; however, the issue before us today is the exception, as Chairman Clayton has expressed concern that a 5-year statute of limitations allows bad actors to hold on to their ill-gotten gains obtained outside of that 5-year window.

As Chairman Clayton has pointed out: Many long-running frauds go longer and, in some cases, well longer than 5 years; and it is just plain wrong to allow a fraudster to keep money made from their fraud simply because he or she was good at concealing the wrongful behavior.

Today's bill is responsive to Chairman Clayton's concerns in a thoughtful and balanced way. Statutes of limitations are important procedural protections intended to strike the balance between ensuring wrongdoers are not rewarded for bad behavior and protecting shareholders, who are ultimately responsible for paying large penalties for violations they did not commit in the event of an SEC judgment.

I know there is concern that the 14-year statute of limitations in the bill is too long. I share concerns that the SEC could be slow to bring a case when certainty and swiftness should be the priority when pursuing enforcement actions. However, the reality is this: A 14-year statute of limitations is a reasonable first attempt to strike the appropriate balance in the disgorgement context.

I say ``first attempt'' because the bill also requires the SEC to report to Congress with data on cases where the SEC has sought disgorgement. These reports will be useful in allowing Congress to evaluate the effectiveness of the statute of limitations and fine-tune it, if appropriate.

This bipartisan bill carefully balances the benefits of statutes of limitations with the downside of fraudsters potentially holding on to significant amounts of their gains.

Again, I thank the gentlemen from Utah and Michigan for their thoughtful draft bipartisan legislation, which I support, and I urge all my colleagues to join me in supporting this commonsense bill.

BREAK IN TRANSCRIPT

Mrs. WAGNER. Mr. Speaker, I urge support of this bill, and I yield back the balance of my time.

BREAK IN TRANSCRIPT

Source