Enhanced S.E.C. Enforcement Authority Act

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 2873) to provide enhanced enforcement authority to the Securities and Exchange Commission, as amended.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Madam Speaker, I yield myself such time as I may consume and rise today to speak in support of H.R. 2873, the Enhanced S.E.C. Enforcement Authority Act, and to congratulate the gentleman from California (Mr. Campbell) for his work on these matters.

H.R. 2873 enjoys bipartisan support and previously passed the House in a slightly different form as part of the Securities Act of 2008 in the 110th Congress. In the 111th Congress, we've also incorporated this commonsense legislative reform in the Investors Protection Act of 2009. The House Financial Services Committee recently approved the Investors Protection Act, and that bill will come to the House floor in the near future as part of the broader financial services regulatory reform package.

The U.S. Securities and Exchange Commission currently has nationwide service of process of subpoenas in administrative proceedings. This bill will enhance the Commission's enforcement

program by allowing subpoenas to be served nationwide in civil actions brought by the agency in Federal court. Currently, the Commission can issue a subpoena only within the Federal jurisdictional district where a trial takes place or within 100 miles of the courthouse. Witnesses in civil cases brought by the Commission are, however, often located outside of a trial court's subpoena range.

With the proliferation of Internet scams that are perpetrated in multiple States, this quirk in the law has hampered the Commission's ability to efficiently and effectively mount its cases. Unless witnesses volunteer to appear at civil trials, the Commission must take depositions where the witnesses are located and use their written or videotaped deposition testimony at trial. Because of the associated travel for numerous lawyers and associates that must be present, depositions are generally more expensive than having a witness attend a trial.

H.R. 2873 would fix this problem by allowing the Commission to have nationwide service of process just as it currently has for its administrative proceedings. These changes in subpoena procedures for civil cases would apply to the Securities Exchange Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. Nationwide service of process would produce a number of substantial advantages, including a significant savings in terms of travel costs and staff time.

During these difficult economic times, we need to ensure that Federal agencies operate more efficiently. Additionally, we need to ensure that the Commission maximizes its limited resources to investigate and resolve wrongdoing in our securities markets. H.R. 2873 achieves both of these important objectives.

Moreover, the bill that the House is considering today incorporates the recommendations of the Commission, the Justice Department and our colleagues on the House Judiciary Committee. The consensus legislation, therefore, not only has bipartisan support in the House but it also has support from within the administration and across committee jurisdictions in the House. In short, H.R. 2873 is a commonsense bill that will allow the U.S. Securities and Exchange Commission to operate more efficiently.

Madam Speaker, I again commend the gentleman from California for his work on these matters, and I urge my colleagues to support this bill.

I reserve the balance of my time.

Mr. Speaker, I have no further requests for time and yield back the balance of my time.

Madam Speaker, I stand here today in support of H.R. 2873, the Enhanced S.E.C. Enforcement Authority Act, which will give the Securities and Exchange Commission, SEC, nationwide service of process. I support this legislation because I believe that it is important that the agency responsible for oversight of our financial system have the necessary tools for legal action against potential violations of the law.

I would like to first thank my colleague, Congressman John Campbell, for introducing this valuable piece of legislation. On December 11, 2008, nearly one year ago, Bernard Madoff was arrested for securities fraud, money laundering, and perjury in one of the largest Ponzi schemes in the history of this country. Estimates of the magnitude of the Madoff scheme were between $50 and $65 billion. The presiding judge in the case declared the crimes, ``extraordinary evil.'' Congress and the American people were appalled by this scandal. The country wondered how our regulatory agencies could fail to recognize fraud of this magnitude for so long.

In the year since the Madoff scandal first came to light, both the Securities and Exchange Commission and Congress have worked to enhance the ability of the SEC to conduct oversight. Internal procedures have been reformed to make it easier for the SEC to open investigations into violations of securities law. New personnel at the SEC, such as the Director of Enforcement, have been hired to ensure that oversight efforts were carried out with the appropriate level of enthusiasm.

Congress has also worked to improve the tools of the SEC to conduct oversight. This bill is in line with the effort to reform the oversight of securities and ensure that massive fraud that was committed on the scale of Bernard Madoff never happens again.

Currently, the Securities and Exchange Commission has to issue subpoenas in the judicial district where the trial takes place or within a ``100-mile bulge'' of the courthouse. This unnecessarily burdens the staff, which has to travel to the courts where the trial takes place, wasting both time and money. Furthermore, by requiring the SEC to seek action in remote district courts, civil cases may be weakened. Witnesses in cases filed by the SEC are frequently located outside of the trial court's subpoena range. Because witnesses who are not able to travel would have to provide an alternative to live testimony, such as a videotaped deposition or written testimony, the impact of their statement is lost. Additionally, securities violations using the internet involve persons across jurisdictions.

H.R. 2873 will streamline the SEC's ability to investigate potential cases of violations of securities law. This bill will allow nationwide service of subpoenas in civil actions brought by the SEC in Federal courts. By granting the SEC this authority, this legislation will eliminate repetitive depositions. While the Congressional Budget Office has not scored this legislation, logically, this legislation will reduce costs for the SEC. The costs of creating and presenting videotaped depositions will be reduced. Additionally, SEC staff will no longer have to travel to file motions in remote district courts, saving the staff time and the taxpayer money.

Other agencies with similar mandates have long had the authority for nationwide service. This body has already considered and passed this provision: during the 110th Congress, the House of Representatives passed a law of this nature in Section 19 of H.R. 6513, the Securities Act of 2008. Furthermore, the SEC already has this authority in administrative proceedings.

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

I would like to thank my colleague from Pennsylvania (Mr. Kanjorski) for his support of this bill and his kind words about this bill. I would also like to thank the Judiciary Committee for working with us on the Financial Services Committee to come up with language that is mutually acceptable and works for everyone on this bill.

In light of the recent Wall Street scandals with Bernie Madoff and Stanford and others, we think it's appropriate to grant the Securities and Exchange Commission some additional enforcement tools that they need to fight fraud and corruption in the markets. As Mr. Kanjorski suggested--and I won't repeat the details of the bill which he accurately described--but if you think about it, most of these SEC enforcement issues will involve investors and perhaps conspirators from all over the country. But yet under current law, the SEC only has the authority to subpoena someone if they live within 100 miles of the Federal courthouse in which the trial is held.

So this means that if they need witness testimony from a victim, from a co-conspirator, from somebody involved with the investment, from somebody who participated in the alleged crime or who was a victim of the alleged crime, they have to get a deposition from them if they live more than 100 miles outside of the courthouse. Those depositions can be costly, difficult to get, and they clearly are not as effective in a trial circumstance as a witness actually in the trial.

This bill would correct that and simply give the SEC the same enforcement capabilities, the same subpoena capabilities that many other Federal enforcement agencies have in similar circumstances.

So I appreciate the bipartisan support. I appreciate the comments.

I reserve the balance of my time.

I will yield back the balance of my time as well.