Legislation would give SEC more time to go after fraudsters

Sen. Reed proposes extending the statute of limitations on securities law violators from five years to 10.
JUN 02, 2015
A Senate Democrat wants to give the Securities and Exchange Commission more time to ferret out fraud in the financial markets. Sen. Jack Reed, D-R.I., introduced a bill on Wednesday that would extend the statute of limitations for the SEC to seek civil monetary penalties from five years to 10 years. The legislation responds to a unanimous 2013 Supreme Court decision, Gabelli v. SEC, which found that the current five-year time limit for the SEC to bring charges begins when the violation occurs, not when it is discovered by the agency. The Gabelli case involved alleged fraud by an investment adviser to a mutual fund in August 2002. The SEC did not file its case until April 2008. The defendant argued that the SEC was too slow on the draw, and the Supreme Court agreed, overturning a lower court decision. INVESTORS VULNERABLE The ruling could leave investors vulnerable to financial fraud that involves increasingly complex investment products and elaborate transactions that can be hidden from regulators for years, Mr. Reed asserted. “We cannot allow Wall Street titans to play fast and loose with our securities laws and then run out the clock,” Mr. Reed said in a statement Friday. “This legislation gives the SEC more time to unearth wrongdoing in the financial marketplace, and sends a clear signal that securities law violators are going to need more than a stopwatch if they intend to break the law.” Mr. Reed has only one co-sponsor for the bill so far, Sen. Jeanne Shaheen, D-N.H. Mr. Reed is a senior Democrat on the Senate Banking Committee, which is controlled by a Republican majority. He recently introduced legislation with a Republican, Sen. Charles Grassley, R-Iowa, that would increase the penalty ceiling for SEC fines. An aide to Mr. Reed said he also is seeking Republicans for the statute-of-limitations bill. “Our view is that providing regulators with the resources they need to enforce our securities laws and prevent financial crimes should be a bipartisan priority,” Dan Curren, deputy press secretary for Mr. Reed, wrote in an email. “The only way to get this bill signed into law is to build consensus, and that is what Senator Reed is seeking to do.”

Latest News

Morningstar forges fintech partnership with SS&C
Morningstar forges fintech partnership with SS&C

The alliance will give Black Diamond users the first chance to use a newly launched advisory suite as Morningstar shutters a legacy advisor platform.

Passive pressures will drive continued mutual fund consolidation into 2030, PWC says
Passive pressures will drive continued mutual fund consolidation into 2030, PWC says

A continuing shift to low fees, growing dominance of mega-managers, and the clamor for product innovation are set to reshape the landscape.

Amid festering trade tensions, Grantham's GMO launches China-dodging ETF
Amid festering trade tensions, Grantham's GMO launches China-dodging ETF

Notwithstanding a recent tech-driven rebound in Chinese markets, five- and 10-year lookbacks suggest dropping the emerging-market giant is still the winning strategy.

Finra sanctions smoothie-throwing broker over alleged cash reporting failures
Finra sanctions smoothie-throwing broker over alleged cash reporting failures

But the Finra panel's decision against James Iannazzo was not unanimous.

Student debt has a chilling effect on employees' retirement planning
Student debt has a chilling effect on employees' retirement planning

A new study highlights how debt-saddled public and private workers are forced to focus on shorter-term investments and immediate financial concerns.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.