PCAOB Enforcement Transparency Act of 2023

Madam President, behind the scenes of our Nation's courtrooms and jails, we will find some of our most dedicated public servants. They are America's public defense lawyers. They work long hours for low pay, and even less attention and acclaim, to protect the most American ideal: equal justice under the law. It is thanks to their service that every single citizen in this country is guaranteed the right to legal counsel.

Well, this Saturday, we have a chance to honor them. It is National Public Defender Day. This year, National Public Defender Day also marks a major milestone in legal history. It is the 60th anniversary of the Supreme Court's decision in the landmark case Gideon v. Wainwright.

As hard as it is to imagine, there were days before the Gideon decision when the constitutional right to legal counsel was not protected. That means, in some States, if you were charged with a crime but couldn't afford a lawyer, you were on your own.

That is exactly what happened to a man named Clarence Gideon in the summer of 1961. At the time, he was down on his luck, struggling with the disease of addiction on the streets of Panama City, FL.

Early one morning in June, he was arrested for a burglary. The evidence against him: A witness claimed that they saw him steal from a local pool hall. The police arrested him based on that accusation alone.

When Mr. Gideon appeared in court, he told the judge he couldn't afford a lawyer, and he asked for an appointed attorney. The judge denied his request. He told Mr. Gideon the court could only appoint counsel to defendants facing the death penalty. In other words, Mr. Gideon was denied his Sixth Amendment right to counsel, which has been enshrined in our Constitution since the enactment of the Bill of Rights, because he wasn't accused of a very serious crime.

Well, Mr. Gideon didn't need a law degree to know something was wrong here. So he picked up a pen and a sheet of paper and wrote a letter to the U.S. Supreme Court, and with that letter, he changed history.

The Supreme Court agreed to hear his case and finally appointed him an attorney--and not just an average attorney--future Supreme Court Justice Abe Fortas.

Fast-forward to March of 1963. The Court issued its decision. All nine Justices ruled unanimously in favor of Mr. Gideon. In the majority opinion, Justice Hugo Black said, ``Lawyers in criminal courts are necessities, not luxuries,'' and he concluded that the ``noble ideal . . . [of] . . . fair trials before impartial tribunals in which every defendant stands equal before the law . . . cannot be realized if the poor man charged with crime has to face his accusers without a lawyer to assist him.''

In the six decades since Gideon, generations of public defenders have stepped up to ensure that no one is denied their right to legal counsel, and for our most vulnerable neighbors in particular, public defenders are an indispensable protection. They have protected the rights of low-income and indigent Americans. They have helped defendants access resources and services to get their lives back on track, and they have worked day in and day out to secure sentences that are humane and proportional.

Moreover, public defenders provide a service to all of us by strengthening the integrity of our system of justice. Think about this: The United States has one of the highest rates of incarceration in the world. So when defendants are denied adequate legal representation, they could end up behind bars for crimes they did not commit or receive excessive or even inhumane sentences for those that they did commit. That is a subversion of justice that wastes resources, violates fundamental values, and, worst of all, treats humans as if they are disposable objects. So all of us owe a debt of gratitude to the public defenders fighting against these injustices.

But we also need to show that gratitude by providing public defenders with the resources they need to advocate for their clients. While the legal profession may be lucrative for attorneys working in big, corporate boardrooms, the reality is very different for lawyers who dedicate themselves to public service. One recent study indicates that--when accounting for the cost of overhead--public defenders can earn as little as $5.16 an hour.

With meager salaries for long hours of work, it is really no wonder that we are currently facing a shortage of public defense lawyers. And that shortage is having a detrimental impact across the country. Criminal cases are going unresolved, defendants in need of medical and mental services are not being treated, and justice is being delayed-- and therefore--denied. This is a problem that effects every part of the country. And right now, States like New Mexico and Oregon have a third of the number of public defenders they need to clear their criminal caseload.

Today, Senator Booker and I will be introducing two bills to underscore the value of public defenders and provide them with greater funding and resources. One of these bills is a piece of legislation we first introduced in 2021: the Sentencing Commission Improvements Act. We wrote this bill for a simple reason. Public defenders not only provide an invaluable service to our country, they also offer an invaluable perspective.

These legal professionals spend countless hours with vulnerable defendants, as well as their families. They see firsthand how the disease of addiction can lead people down the wrong path and understand how to best support them, so they can get on the road to recovery.

Public defenders help console children who are coming to terms with the fact that they may not hug a parent for years because they are behind bars. And they are there to hold a parent's hand when they find out their son or daughter has received a lengthy sentence. Public defenders understand the sobering--and sometimes grim--reality of our justice system better than anyone. So to build a system that actually prepares incarcerated people to reenter society and become productive citizens, we need to give public defenders a seat at the decision- making table. The Sentencing Commission Improvements Act will achieve that by adding an ex officio member to the U.S. Sentencing Commission who is a public defender. It is exactly the perspective the Commission needs to develop fairer sentencing guidelines.

Our other bill is the Quality Defense Act. It will create a grant program to help fund data collection, hiring, increased compensation, and loan assistance programs for public defenders. This bill also directs the Justice Department to study and develop best practices and recommendations on appropriate public defender caseloads and levels of compensation. These measures will provide public defenders with resources that reflect the importance of their service and encourage attorneys to pursue careers as public defenders.

I believe our justice system is stronger when it incorporates the insights of experts who have worked across the legal spectrum. That is why, as chair of the Senate Judiciary Committee, I have worked to confirm Federal judges who have served as public defenders. These perspectives have long been excluded from the Federal bench, which is a disservice to the American public. Thankfully, we are finally changing course. Last year, this Senate confirmed the first former public defender to ever serve on the Supreme Court: Justice Ketanji Brown Jackson.

And in the past 2 years, we have confirmed more circuit judges with experience as public defenders than all prior Presidents combined. One of them is Judge Candace Jackson-Akiwumi, who serves on the Seventh Circuit in my home State of Illinois. Back in 2017, Judge Jackson- Akiwumi reflected on her time as a public defender--and how it tested her as a legal professional.

She wrote that, as a public defender, ``I am a counselor, helping clients to navigate difficult choices. . . . I am a teacher, introducing clients and their families to the federal court system . . .

``[and] I am a lay social worker: many of our clients have disadvantaged backgrounds, extensive mental health histories, substance abuse issues, and other everyday challenges.''

When you work as a public defender, the job demands a lot more than a simple attorney-client relationship. It is a job that demands resourcefulness, thoughtfulness, and quick, strategic thinking. These are the same qualities we need in the judges who serve on our Nation's Federal courts. And they are the same qualities people look for when they enter the courtroom as a plaintiff or defendant.

So as we honor National Public Defender Day this weekend, I want to thank all of our courageous and dedicated public defense attorneys across America. We are grateful for your commitment to defending equal justice under law.

Madam President, I ask unanimous consent that the text of the bill be printed in the Record.

Madam President, today I am introducing the Stronger Enforcement of Civil Penalties Act along with Senator Grassley. This bill will help securities regulators better protect investors and demand greater accountability from market players. Even in the midst of an unprecedented public health and economic emergency, we continue to see calculated wrongdoing by some on Wall Street, and without the consequence of meaningful penalties to serve as an effective deterrent, I worry this disturbing culture of misconduct will persist.

The amount of penalties the Securities and Exchange Commission, SEC, can fine an institution or individual is restricted by statute. During hearings I held in 2011 as chairman of the Banking Committee's Securities, Insurance, and Investment Subcommittee, I learned how this limitation significantly interferes with the SEC's ability to execute its enforcement duties. At that time, a Federal judge had criticized the SEC for not obtaining a larger settlement against Citigroup, a major actor in the financial crisis that settled with the Agency in an amount that was far below the cost the bank had inflicted on investors. The SEC indicated that a statutory prohibition against levying a larger penalty led to the low settlement amount. Indeed, in the immediate aftermath of the financial crisis, then-SEC Chairman Mary Schapiro explained that ``the Commission's statutory authority to obtain civil monetary penalties with appropriate deterrent effect is limited in many circumstances.'' Unfortunately, the SEC's statutory authority remains unchanged and the Agency's deterrent effect remains limited--even though securities fraud has not abated.

The bipartisan bill we are introducing aims to update the SEC's outdated civil penalties statutes. This bill strives to make potential and current offenders think twice before engaging in misconduct by raising the maximum statutory civil monetary penalties, directly linking the size of the penalties to the amount of losses suffered by victims of a violation, and substantially increasing the financial stakes for serial offenders of our Nation's securities laws.

Specifically, our bill would broaden the SEC's options to tailor penalties to the particular circumstances of a given violation. In addition to raising the per violation caps for severe, or ``third tier,'' violations to $1 million per offense for individuals and $10 million per offense for entities, the legislation would also give the SEC more options to collect greater penalties based on the ill-gotten gains of the violator or on the financial harm to investors.

Our bill also seeks to deter repeat offenders on Wall Street through two provisions. The first would authorize the SEC to triple the penalty cap applicable to recidivists who have been held either criminally or civilly liable for securities fraud within the previous 5 years. The second would allow the SEC to seek a civil penalty against those who violate existing Federal court or SEC orders, an approach that would be more efficient, effective, and flexible to the current civil contempt remedy. These updates would greatly enhance the SEC's ability to levy tough penalties against repeat offenders.

The SEC's current Director of Enforcement said several months ago that ``a centerpiece'' of the Agency's efforts to ``hold wrongdoers accountable and deter future misconduct . . . is ensuring that we are using every tool in our toolkit, including penalties that have a deterrent effect and are viewed as more than the cost of doing business.'' Our bill will strengthen the SEC's existing tools, which will further increase deterrence and substantially ratchet up the costs of committing fraud.

All of our constituents deserve a strong regulator that has the necessary tools to go after fraudsters and pursue the difficult cases arising from our increasingly complex financial markets. The Stronger Enforcement of Civil Penalties Act will enhance the SEC's ability to demand meaningful accountability from Wall Street, which in turn will increase transparency and confidence in our financial system. I urge our colleagues to support this important bipartisan legislation.

Madam President, the Public Company Accounting Oversight Board, PCAOB, Enforcement Transparency Act, which I am reintroducing today with Senator Grassley, will bring needed transparency to the disciplinary proceedings the PCAOB has brought against auditors and audit firms earlier in the process.

Nearly two decades ago, in response to a series of massive financial reporting frauds, including those involving Enron and WorldCom, the Senate Banking Committee held multiple hearings, which produced consensus on various underlying causes, including weak corporate governance, a lack of accountability, and inadequate oversight of accountants charged with auditing public companies' financial statements. Later, in a 99-to-0 vote, the Senate passed the Sarbanes- Oxley Act of 2002 to address the structural weaknesses revealed by the hearings. Among its many provisions, this law called for the creation of an independent board, the PCAOB, responsible for overseeing auditors of public companies in order to protect investors who rely on independent audit reports on the financial statements of public companies.

Today, the PCAOB, under the oversight of the U.S. Securities and Exchange Commissions, SEC, oversees nearly 1,700 registered accounting firms, as well as the audit partners and staff who contribute to a firm's work on each audit. The Board's ability to begin proceedings that can determine whether there have been violations of its auditing standards or rules of professional practice is a crucial component of its oversight. However, unlike other oversight bodies, the Board's disciplinary proceedings cannot be made public without consent from the parties involved. Of course, parties subject to disciplinary proceedings have no incentive to consent to publicizing their alleged wrongdoing, and these proceedings typically remain cloaked behind a veil of secrecy. In addition, the Board cannot publicize the results of its disciplinary proceedings until after the appeals process has been completely exhausted, which can often take several years.

This lack of transparency invites abuse and undermines the congressional intent behind the PCAOB, which was to shine a bright light on auditing firms and practices, deter misconduct, and bolster the accountability of auditors of public companies to the investing public.

Our bill will restore transparency by making hearings by the PCAOB and all related notices, orders, and notices, orders and motions transparent and available to the public unless otherwise ordered by the Board. This would more closely align the PCAOB's procedures with those of the SEC for analogous matters.

Increasing transparency and accountability of audit firms subject to PCAOB disciplinary proceedings bolsters investor confidence in our financial markets and better protects companies from problematic auditors. I hope our colleagues will join Senator Grassley and me in supporting this legislation to enhance transparency in the PCAOB's enforcement process.

Madam President, this Saturday, March 18, will mark the 60th anniversary of the unanimous and landmark Supreme Court decision in Gideon v. Wainwright, which held that every American has the constitutional right in criminal cases, regardless of their wealth and where they were born--they have a right, fundamentally, to the public defense system that we know today.

Before Gideon was decided, people accused of crimes were left to fend for themselves, having to navigate arraignments, plea bargains, jury decisions, trials, cross-examination of witnesses--every part of the criminal prosecution, they had to do it themselves while facing government prosecutors who had the legal upper hand.

Clarence Earl Gideon was a 51-year-old with an eighth grade education who ran away from home in middle school. History describes him as a ``drifter'' who spent time in and out of prison for nonviolent crimes, but history would also come to know him as someone who fundamentally transformed our legal system so that any person without resources accused of a crime has a due process right to a fair trial. You can't have a fair trial without counsel.

In 1961, Gideon was arrested for stealing $5 in change and beer, allegedly doing so from the Bay Harbor Poolroom in Panama City, FL. As James Baldwin would write the same year as Gideon's arrest, ``Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.''

Gideon, who had spent much of his life in poverty, was too poor to hire an attorney and asked the trial court to appoint one for him. The court denied his request, saying that only indigent defenders facing the death penalty are entitled to a lawyer.

Gideon assumed the burden of defending himself at trial, becoming his own lawyer. He made an opening statement to the jury and cross-examined the prosecution's witnesses. He presented witnesses in his own defense. He declined to testify himself and made arguments emphasizing his innocence.

Despite his valiant efforts, the jury found Gideon guilty of this $5 theft, and he was sentenced to 5 years' imprisonment. But Gideon felt he had been fundamentally deprived of his due process rights.

Determined to prove his innocence, Gideon penciled a five-page, handwritten petition asking the nine Justices of the Supreme Court to consider his case. Against all odds, the Supreme Court granted Gideon's petition.

Gideon would tell the Supreme Court:

It makes no difference how old I am or what color I am or

which church I belong to, if any. The question is I did not

get a fair trial. The question is very simple. I requested

the court to appoint me [an] attorney and the court refused.

In the Court's unanimous decision, they held that ``reason and reflection require us to recognize that in our adversary system of criminal justice, any person haled into court, who is too poor to hire a lawyer, cannot be assured a fair trial unless counsel is provided for him.''

Gideon's case was sent back to the lower court, where he had a lawyer to defend him. It took the jury only 1 hour to come to a verdict and acquit him.

From that time on, the public defense system as we know it today came into existence. Folks who couldn't afford a lawyer 60 years ago are now guaranteed basic legal protection. Public defenders play a sacrosanct role in our society. Every one of America's public defenders embarks on the noble work that is the cornerstone of our legal system, ensuring that every citizen has a right to a fair trial, that every citizen has access to justice within the justice system.

Yet the promise of Gideon, the promise of this decision, still remains unfulfilled. The public defense is under such strain that in many places, it barely functions.

Justice Black declared that ``lawyers in criminal courts are necessities, not luxuries.'' But too often across our country, adequate legal representation is a luxury only afforded to those who are wealthy enough to hire a lawyer.

Despite their important and essential work to the cause of justice, public defenders carry crushing caseloads that strain their ability to meet their legal and ethical obligations to provide effective representation. According to a 2019 Brennan Center report, only 27 percent of county-based and 21 percent of State-based public defender offices have enough attorneys to adequately handle their caseloads. There are counties and States in America where public defenders are responsible for more than 200 cases at one time.

The quality of public defenders also varies from State to State, town to town, case to case. Compared to prosecutors and other attorneys, public defenders are woefully underresourced and underpaid. That is why today, with my friend and colleague from Illinois, Senator Durbin, I am introducing the Providing a Quality Defense Act to provide funding to local governments to hire more public defenders so that those accused of crimes can receive adequate representation.

The bill will provide funding to increase salaries for public defenders so that they can have pay parity with the prosecutors they face. It will require

the Department of Justice to conduct evidence-based studies and make recommendations for appropriate caseloads for public defenders and for adequate compensation.

Public defenders don't just represent their clients with zealous advocacy; they get to know their clients and see the impact of convictions on their families and loved ones. This experience is invaluable and helps to inform sentencing should there be a conviction. However, unlike the majority of State sentencing commissions, the U.S. Sentencing Commission, an independent Agency tasked with establishing sentencing policies and practices for the Federal court, lacks a representative from a public defender background who would provide an essential perspective on the criminal justice system.

Today, again, along with Senator Durbin, I am reintroducing the Sentencing Commission Improvements Act to add a member to the U.S. Sentencing Commission with a public defender background who will bring a new and valuable perspective to the Commission.

I urge my colleagues to support both of these bills, which will bring us one step closer to a justice system that is fairer, more humane, and more just. Such a criminal justice system is part of the legacy of a so-called drifter, a 51-year-old who spoke truth to power, who challenged a system that seemed impossible to beat, who challenged the very idea of what it means to have a just justice system. If the moral arc of the universe bends towards justice, then Clarence Earl Gideon is one of the arc benders.

Madam President, the Public Company Accounting Oversight Board, PCAOB, Enforcement Transparency Act, which I am reintroducing today with Senator Grassley, will bring needed transparency to the disciplinary proceedings the PCAOB has brought against auditors and audit firms earlier in the process.

Nearly two decades ago, in response to a series of massive financial reporting frauds, including those involving Enron and WorldCom, the Senate Banking Committee held multiple hearings, which produced consensus on various underlying causes, including weak corporate governance, a lack of accountability, and inadequate oversight of accountants charged with auditing public companies' financial statements. Later, in a 99-to-0 vote, the Senate passed the Sarbanes- Oxley Act of 2002 to address the structural weaknesses revealed by the hearings. Among its many provisions, this law called for the creation of an independent board, the PCAOB, responsible for overseeing auditors of public companies in order to protect investors who rely on independent audit reports on the financial statements of public companies.

Today, the PCAOB, under the oversight of the U.S. Securities and Exchange Commissions, SEC, oversees nearly 1,700 registered accounting firms, as well as the audit partners and staff who contribute to a firm's work on each audit. The Board's ability to begin proceedings that can determine whether there have been violations of its auditing standards or rules of professional practice is a crucial component of its oversight. However, unlike other oversight bodies, the Board's disciplinary proceedings cannot be made public without consent from the parties involved. Of course, parties subject to disciplinary proceedings have no incentive to consent to publicizing their alleged wrongdoing, and these proceedings typically remain cloaked behind a veil of secrecy. In addition, the Board cannot publicize the results of its disciplinary proceedings until after the appeals process has been completely exhausted, which can often take several years.

This lack of transparency invites abuse and undermines the congressional intent behind the PCAOB, which was to shine a bright light on auditing firms and practices, deter misconduct, and bolster the accountability of auditors of public companies to the investing public.

Our bill will restore transparency by making hearings by the PCAOB and all related notices, orders, and notices, orders and motions transparent and available to the public unless otherwise ordered by the Board. This would more closely align the PCAOB's procedures with those of the SEC for analogous matters.

Increasing transparency and accountability of audit firms subject to PCAOB disciplinary proceedings bolsters investor confidence in our financial markets and better protects companies from problematic auditors. I hope our colleagues will join Senator Grassley and me in supporting this legislation to enhance transparency in the PCAOB's enforcement process.

Madam President, as Tax Day approaches, Americans families have begun calculating their taxes and filling out returns. They face a Tax Code that is frustratingly complex and at times unfair. The bill that I am introducing today would remedy a major discrepancy. The SALT Deduction Fairness Act would ensure that limits on State and local tax deductions, also known as SALT deductions, do not unfairly penalize married filers.

Currently, the amount of State and local taxes that both single and married filers may deduct from their annual income taxes is capped at $10,000. Married people who file their taxes separately are limited to $5,000 each. In other words, people would be better off not getting married at all when it comes to the SALT deduction. My legislation eliminates the marriage penalty by treating married couples fairly by doubling their deduction to $20,000 when they file jointly or $10,000 each for married individuals who file separate returns.

The SALT deduction has been in the Tax Code since 1913 when the income tax was established. It is intended to protect taxpayers from double taxation. When the Senate considered the Tax Cuts and Jobs Act, I worked to keep the SALT deduction in the Federal Tax Code because of the increased tax burden its elimination would have imposed on Mainers. They already pay taxes on their homes and seasonal properties, annual excise taxes on their vehicles, sales taxes, and State income taxes. The Senate adopted my amendment, preserving the deduction for State and local taxes up to $10,000.

Maine has one of the Nation's highest State income tax rates, making this deduction especially important to families in my State. Last year, an analysis by WalletHub found that Maine had the third highest overall tax burden behind only New York and Hawaii. Yet, according to the U.S. Census Bureau, Maine's median household income ranks only 32nd in the Nation and is approximately $5,000 below the U.S. median household income. Many Mainers are also subject to high local property taxes. The SALT deduction helps to offset the burden these taxes place on Maine families, providing critical relief for those who itemize their deductions.

More broadly, our Tax Code must be fair to the more than 60 million married couples living in our Nation. A couple should not face a tax penalty for being married. One way to do that is to not penalize the deductions they can take for State and local taxes. The SALT Deduction Fairness Act remedies this.

I urge my colleagues to support this commonsense bill to fix this marriage penalty.