For Immediate Release
Public Citizen Supports Reed-Grassley Bill to Improve SEC Penalty Powers
Financial Institutions Unlikely to Repent Unless Fines Hurt
WASHINGTON - Congress should approve a bipartisan bill that empowers the Securities and Exchange Commission (SEC) to penalize securities fraud perpetrators up to three times the value of the fraud, Public Citizen said in a letter sent today to U.S. senators. The Stronger Enforcement of Civil Penalties Act (SEC Penalties Act, S.3416), introduced by Sens. Jack Reed (D-R.I.) and Charles Grassley (R-Iowa), would replace the SEC’s current power that limits penalties to just the amount of a firm’s ill-gotten gains.
According to the letter from Lisa Gilbert, acting director of Public Citizen’s Congress Watch division, “The SEC is currently investigating the integrity of JPMorgan’s disclosures of the ‘London Whale’ losses and selective disclosures during the Facebook IPO. Collectively, these demonstrate that financial law enforcers should be given greater authority to mete out more appropriate consequences when they determine wrong-doing. The American investor deserves no less.” Added Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division, “Weak penalties that come to be viewed as acceptable operating expenses do not provide any incentive for repeat offenders to change their behavior.”
Republicans and Democrats alike have called for strong regulatory enforcement in response to the financial crisis and ongoing scandals in London and the United States. Public Citizen is urging the Senate to expedite this meaningful legislation that is so attuned with these financial times.
The current system does not “credibly serve as meaningful punishment and deterrent,” Gilbert said.
The letter is available at http://www.citizen.org/documents/reed-grassley-sec-penalties.pdf
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.