"This legislation will help rebuild investor confidence by saying that a basic sense of fairness exists in the marketplace," said subcommittee chairman Richard Baker (LA). "We're telling all market participants that perpetrators of securities fraud will be caught quickly, punished severely, and their ill-gotten gains will be taken away and given back to the victims of securities fraud who had their money stolen from them."

 

The Securities Fraud Deterrence and Investor Restitution Act, H.R. 2179, was introduced last month to boost the SEC's ability to pursue securities law violators, increase efficiency at the SEC and ensure investors are given an adequate opportunity to recoup losses resulting from fraud.

 

The bill is part of an ongoing effort that began with Sarbanes-Oxley to strengthen the SEC's ability to investigate and deter fraud and to increase the amount of money returned to victims of securities violations.

 

The Federal Account for Investor Restitution Fund, known as the FAIR Fund, which was added to last year's corporate accountability legislation by Chairman Baker, strengthened a mechanism used by the SEC to return civil penalty funds to wronged investors. The Fund's guiding principle is that all monies recovered in SEC enforcement actions be made available first to compensate the victims of securities fraud.  

 

H.R. 2179 would continue this endeavor by fortifying the SEC's enforcement authority and ensuring that recovered funds go back to the investors who lost them.

"As the national market regulator, the SEC needs additional power to effectively punish and deter corporate and securities fraud," said Committee Chairman Michael G. Oxley (OH), co-author of the Sarbanes-Oxley Act. "The Baker bill would permit the Commission to more effectively use its resources."

 

Scheduled to testify are Stephen M. Cutler, Division of Enforcement Director, SEC; Mary L. Schapiro, Vice Chairman and President of Regulatory Policy & Oversight, NASD; and Christine A. Bruenn, President, North American Securities Administrators Association.

 

The hearing is scheduled for 10 a.m. in room 2128 of the Rayburn Building.