Investor Protection and Capital Markets Fairness Act

Floor Speech

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Mr. HUIZENGA. Mr. Speaker, I rise today in support of H.R. 4344, the Investor Protection and Capital Markets Fairness Act.

In June of 2017, as has been discussed, the Supreme Court ruled unanimously in the Kokesh v. Securities and Exchange Commission that the SEC's disgorgement remedy constitutes a penalty, and, as a result, the Supreme Court found that the SEC's disgorgement authority--in other words, their ability to go collect those dollars--was subject to a 5- year statute of limitations.

That may be how the law is currently reads. That is why we are here today to try to change that.

As a result of the Kokesh case, the Supreme Court decision has significantly limited the SEC's ability to obtain disgorgement in certain long-running frauds.

According to the most recent SEC enforcement division's annual report, it is estimated that due to this Kokesh ruling, the SEC is forced to forgo more than $1.1 billion in ill-gotten gains from wrongdoers at the expense of Main Street investors.

H.R. 4344 would grant the SEC the authority to seek and for Federal courts to grant disgorgement within 14 years. Additionally, the bill would further clarify that disgorgement may not be construed as a civil fine, penalty, or forfeiture. Lastly, the bill requires the SEC to submit a report to Congress on the length of certain fraud actions that they have encountered, including the 10 longest-running frauds that led to Commission action.

So ideally, I would like to see a shorter statute of limitations. There was discussion about matching it with some other Federal statutes, but I also recognize that many securities frauds are complex and take significant time to uncover and investigate. For example, in this particular case, Charles Kokesh, over the course of nearly 14 years, quietly committed well concealed and elaborate fraud by misappropriating nearly $35 million. And to add insult to injury, because of the Supreme Court decision, Kokesh was allowed, the fraudster was allowed to keep nearly $30 million of what he stole from small-dollar Main Street investors. I don't think any of us can look at that and feel good about that current situation.

This bipartisan bill attempts to strike a delicate balance by ensuring that the SEC has the necessary resources and tools to go after bad actors and to make sure that these sophisticated fraudsters may not keep any of the money that they have stolen from everyday investors like teachers and military service personnel, the elderly, and religious-affiliated groups.

SEC Chairman, Jay Clayton stated, ``H.R. 4344 is an important response to real harms suffered by innocent victims of the worst types of securities frauds. These are frauds that undermine the public confidence in our markets that the 4,400 women and men of the SEC strive to preserve every day.''

I would like to thank my colleague, the gentleman from Utah (Mr. McAdams), for closely working with me on this important issue to help protect millions of Main Street investors. H.R. 4344 provides the SEC with the necessary tools to ensure sophisticated criminals who defraud everyday investors for long periods of time that they are prevented from keeping their victims' money.

So I urge all of my colleagues to vote in favor of this overwhelmingly bipartisan investor protection legislation.

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