Legislation News & Report (TM) 

TheWeekInCongress.com (TM)

Managing America: Banking & Finance

TheWeekInCongress.com (TM)

Week Ending August 1, 2008

H.R.6513 To amend the Federal securities laws to enhance the effectiveness of the Securities and Exchange Commission's enforcement, corporation finance, trading and markets, investment management, and examination programs, and for other purposes.

The bill strengthens the Securities and Exchange Commission’s ability to enforce penalties and other legal actions. Among the authorities are the ability to levy penalties, fingerprint and serve subpoenas nationwide.

In any cease and desist proceeding the Commission may impose a civil penalty on a person if it finds, on the record and after notice and opportunity for hearing that the person is violating or has violated any provision of rule or regulation or is or was a cause of the violation and such a penalty is in the public interest.

The penalties are tiered:

The first tier sets a maximum penalty for each act or omission at $6,500 for a natural person or $65,000 for any other person. The second tier sets the penalty at $65,000 for a natural person and $325,000 for any other person if the act involved fraud, deceit, manipulation or deliberate or reckless disregard of a regulatory requirement. Tier three sets the maximum penalty for a natural person at $130,000 and any other person at $650,000 if the act or omission involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement and such act or omission directly or indirectly resulted in substantial losses to other persons ore resulted in substantial pecuniary gain to the person who committed the act or omission.

Other provisions in the bill may bar a person from being associated with a broker, transfer agent, investment advisor, municipal securities dealer, or dealer for twelve months.

The SEC and related boards must report yearly to Congress for five years on efforts to reduce the complexity in financial reporting to provide more accurate and clear financial information to investors. The reports must reassess complex and outdated accounting standards, improve the understandability, consistency and overall usability of existing accounting and auditing literature, develop principles-based accounting standards, encourage the use and acceptance of interactive data and promote disclosures in plain English.

Repeal of the Public Holding Company Act of 1935.

In the early 1990s electric and natural gas utilities began a process of owning other utility companies. The effort benefited the bottom line of such businesses thereby lowering the cost of energy to consumers. Ultimately, because the utilities were unregulated, the practice turned to manipulation of energy costs and stock holdings and prices and exorbitant fees. When those companies collapsed during the Great Depression, the Public Utilities Holding Company Act was passed to regulate the industry.

Repeal of the PUHCA has come up regularly and this bill would accomplish the job but with some regulations in place to protect consumers from various expensive abuses.

`(i) sudden and excessive fluctuations of securities prices generally, or a substantial threat thereof, that threaten fair and orderly markets; or

`(ii) a substantial disruption of the safe or efficient operation of the national system for clearance and settlement of transactions in securities, or a substantial threat thereof; or

`(B) a major disturbance that substantially disrupts, or threatens to substantially disrupt--

`(i) the functioning of securities markets, investment companies, or any other significant portion or segment of the securities markets; or

`(ii) the transmission or processing of securities transactions.'.

The Commission may reconsider penalties based on the ability of the person to pay, continue in business and if it is in the public interest.

Sponsor:  Rep. Paul Kanjorski (PA-11^th)

Vote: Passed House by Unanimous Consent September 11, 2008

Cost to the taxpayers:

Earmark Certification:  

## All Rights Reserved. © 2008 TheWeekInCongress.com(TM)

No reproduction, language translation or distribution without written permission from TheWeekInCongress.com.(TM)

MORE INFORMATION

All Rights Reserved. © 2008 TheWeekInCongress.com(TM)

No reproduction, language translation or distribution without written permission from TheWeekInCongress.com.(TM)