Enhanced S.E.C. Enforcement Authority Act
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…
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.