House bill seeks to hike SEC’s powers

Jul 9, 2008 @ 10:46 am

By Neil Roland

Legislation to expand the Securities and Exchange Commission’s enforcement authority is due to be considered by a House subcommittee tomorrow, according to Crain's Financial Week.

In an odd bit of timing, the bill is being considered in the same week that outgoing SEC commissioner Paul Atkins called for an independent panel to consider trimming the agency’s enforcement authority.

The legislation is slated be introduced by House Capital Markets subcommittee chairman Paul Kanjorski, D-Pa.

A copy of the draft to be considered by the panel reveals few new ideas. Indeed, some of the bill’s provisions have previously been requested by SEC officials in appearances before Congress.

For example, the legislation would require the SEC chairman (currently Christopher Cox) to testify annually before Congress about agency efforts to get publicly traded companies “to provide more accurate and clearer financial information to investors,” according to the draft. Legislation to require such testimony passed the House last year.

Nevertheless, the proposal, if passed, would substantially increase the commission’s existing powers.

For one thing, the bill would let the SEC seek fines in administrative proceedings, not just federal court.

What’s more, the proposal would grant the agency the right to bar brokers, investment advisers and municipal bond dealers that violate federal law from entering other sectors of the securities industry. In addition, the SEC would get expanded subpoena authority.

“Some of these provisions, like the one on fines, are pretty aggressive,” Georgetown University law professor Donald Langevoort told Financial Week.

“They run into crosswinds from some business groups that are seeking to limit the SEC’s authority as part of an effort to expand companies’ international competitiveness.”

Mr. Langevoort said the bill would likely be blocked by legislators arguing that many of these issues are best addressed in a broader consideration of the SEC’s role in a global economy.

Opponents of the bill might find an ally in Mr. Atkins, a Republican commissioner due to leave the SEC at the end of the month.

In an article published yesterday, Mr. Atkins wrote that the securities regulator had been overly aggressive in its investigations and prosecutions.

He called for formation of an independent panel to consider whether the agency’s fines and penalties are having the desired effect.

Mr. Atkins, a self-described libertarian, did not immediately respond to a request for comment on the legislation.


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