|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
Frank, Kanjorski Say SEC Is Lagging In Providing Restitution
Staff Writer – Congress Daily
Securities Mosaic. October 5, 2005
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EXCERPT: House Financial Services ranking member Barney Frank, D-Mass., and Financial Services Capital Markets Subcommittee ranking member Paul Kanjorski, D-Pa., have called for hearings on the SEC's efforts to provide restitution for defrauded investors under the 2002 Sarbanes-Oxley corporate governance law. The lawmakers cited a GAO report, released Monday, which found that billions of dollars collected from corporate wrongdoers under the law's Federal Account for Investor Restitution Fund provision has not yet been returned to investors. GAO also said the SEC must improve its ability to gather and track information on FAIR Fund cases. Kanjorski said he was "deeply troubled" that the SEC has been unable to return the money to investors more quickly. "If the SEC needs additional statutory reforms to protect innocent investors, my Democratic colleagues and I stand ready to work in Congress to consider such changes," Kanjorski said. The study, conducted at the request of Kanjorski, Frank and House Energy and Commerce ranking member John Dingell, D-Mich., found that as of April 2005, the SEC had collected more than $4.8 billion in repayments and civil penalties and earmarked those funds for restitution to harmed investors. But the SEC had only distributed about $60 million of those funds and was preparing to distribute an additional $25 million, according to the report. The study found that in some cases factors beyond the SEC's control had hindered its restitution efforts. In one case, for example, a company had agreed to pay $80 million, but the SEC was barred from distributing those funds to defrauded investors until a pending criminal case had been resolved. GAO said the SEC has taken steps to expedite its distribution process and improve its systems for tracking the amount of money collected and distributed under the FAIR Fund provision. But the report recommended additional improvements. "Overall, SEC staff lacks some of the tools and support it needs to conduct collection and track collection data," GAO said. "Just as important, SEC management also does not have the appropriate tools to evaluate the effectiveness of the agency's collection activities." |
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