To amend the Federal securities laws to clarify and expand the definition of certain persons under those laws.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 2623, legislation that would amend the Federal securities laws to clarify the Security and Exchange Commission's, the SEC, authority to sanction certain employees of regulated or supervised entities after they leave their jobs.

I would like to thank Mr. Kanjorski and Chairman Frank for bringing this bill to the floor today. I would also like to mention that this legislation was included in a larger piece of securities legislation from the 110th Congress, H.R. 6513, the Securities Act of 2008, which passed the House on suspension by voice vote.

The legislation is also included in H.R. 3310, the Consumer Protection and Regulatory Enhancement Act introduced by Ranking Member Bachus, and I appreciate his support on this legislation.

This legislation is directed at ensuring that former employees of organizations like the New York Stock Exchange or the Financial Industry Regulatory Authority can be held accountable for any misconduct while an employee of these organizations.

Many provisions of Federal securities law which authorize the sanctioning of a person who engages in misconduct while associated with a regulated or supervised entity explicitly provide that such authority exists even if the person is no longer associated with that entity or has left his or her job. But there are confusing loopholes so that employees of some regulated or supervised organizations cannot be sanctioned by the SEC after they leave their positions. By clarifying the SEC's authority to sanction formerly associated persons, we ensure that employees are held accountable for their actions while in those positions even if they have moved on to another job.

Specifically, my legislation amends the Securities Exchange Act of 1994 and the Investment Company Act of 1940. Congress must ensure that the SEC has authority to investigate individuals suspected of violating the securities laws, to bring enforcement cases, and have those cases considered on the merits and not be dismissed on an ambiguity because a statute is confusing. No one should be able to violate the securities laws and resign their position knowing that the SEC cannot proceed against them. My legislation does not expand or alter the SEC's current authority; it clarifies it.

One illustration of the need for this legislation is in the case of Sal Sodano, who was chairman and CEO of the American Stock Exchange, AMEX. On March 22, 2007, the SEC charged Sodano with failing to enforce compliance with the Exchange Act during his term as the AMEX chairman and CEO; however, the SEC's filing occurred after Sodano left the AMEX in 2005. So his lawyers pointed to this loophole in the Federal law that the SEC could only sanction individuals while they were still associated with the organization.

The SEC's administrative law judge noted that the current law does not provide for sanctioning of a former officer or director. The judge specifically noted that Congress has drafted many statutes that allow the ability to sanction individuals formerly associated with any number of entities, but not in this case. By passing H.R. 2623, Congress can close this loophole and ensure accountability for individuals working at regulated or supervised entities.

I urge my colleagues to support this legislation, which will provide more accountability, transparency, and efficiency in securities regulation.

Mr. Speaker, I yield back the balance of my time.

General Leave

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2623) to amend the Federal securities laws to clarify and expand the definition of certain persons under those laws.

Mr. Speaker, this is another important bipartisan bill. The gentleman from California (Mr. McCarthy) took the initiative here, and we were pleased to work with him.

The Chair of the subcommittee, the gentleman from Pennsylvania (Mr. Kanjorski), is dealing with a back problem, so he's not here. But he's not dealing with a backbone problem, because this bill puts some more backbone into the antifraud laws. And what it does is, in consultation with the SEC, enhances their ability to kick people, in effect, out of the industry who have a bad record. And it makes it very clear that a past bad record or a past affiliation would still be relevant in giving the SEC the right to protect investors.

We are all aware that too little has been done to protect investors. This is a step forward towards further empowering the SEC to do the job of protecting investors.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, first I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks and include extraneous material on this bill and the preceding bill, H.R. 3139.

I congratulate the gentleman from California on his work.

Mr. Speaker, I yield back the balance of my time.