[Congressional Record Volume 148, Number 92 (Wednesday, July 10, 2002)]
[Senate]
[Pages S6567-S6568]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       DELAYING ACTION ON S. 2673

  Mr. NELSON of Florida. Madam President, it is my understanding that 
what has happened here is that our friend and colleague, the senior 
Senator from Michigan, has asked for unanimous consent, earlier, and it 
was denied by the senior Senator from Texas, in order to proceed with 
the offering of an amendment that would considerably strengthen the 
underlying bill that we have under consideration.
  It is with a heavy heart that I saw the parliamentary tactics--
clearly within any Senator's opportunity to utilize--to delay a piece 
of legislation that would address the issue before us that is 
resonating in the hearts of every American, that being the subject of 
corporate greed.
  Indeed, what we have seen is that which is obviously resonating 
because I am told the stock market has gone down almost 300 points 
today, down to a range of about 8,800. You would think folks would 
realize that the stock market is a reflection of the confidence of the 
American people, not only in the economy but in a lot of the engines 
that drive the economy.
  Most of the great corporate structures are very solid financially as 
well as ethically, but having seen some of the lapses in ethical 
judgment have led to some of the exposes that we have seen over the 
course of the last months, I am rather surprised to see these 
parliamentary delaying tactics by folks from the other side of the 
aisle when in fact what the American people would like to know is that 
their Representatives in the U.S. Congress are responding with very 
tough laws enacted to address the problems of corporate greed.
  We can talk about the Enrons. We can talk about the WorldComs. We can 
talk about whatever. Lord knows what is going to be next. But that is 
why Senator Levin and I will be coming to the floor after being denied, 
tonight, the opportunity to offer an amendment that will strengthen the 
underlying bill. We will come to offer reforms aimed at preventing 
corporate fraud and punishing its perpetrators.
  The senior Senator from Michigan, as the Chairman of the Armed 
Services Committee, lends an expertise to this body in matters of 
defense. He has a perspective that, to keep America strong from a 
military standpoint, we have to be economically strong and we have to 
be morally strong. So that is getting right to the heart of what we are 
doing, trying to enact a law preventing the perpetrating of corporate 
fraud or then seeing that the perpetrators are punished.
  There were at WorldCom 17,000 workers who received pink slips. While 
it was realizing $1.1 billion in losses in the retirement funds of 
those employees, and while those 17,000 employees were getting those 
pink slips, the corporate executives were attending a retreat in 
Hawaii. One of them was putting the finishing touches on a new $15 
million mansion. I am not absolutely sure, but I think that person is 
one and the same person whose $15 million mansion is in my State.
  Then late last year, Global Crossing laid off 1,200 people, giving 
them no severance package, while the CEO there walked away with 
hundreds of millions of dollars. Is there something wrong with this 
picture? Yes, there is. And the American people are feeling it. Part of 
that is what we are seeing resonating in the plunge of America's stock 
markets.
  So last summer, while Enron executives were selling their shares for 
hundreds of millions of dollars and protecting their portfolios, their 
employees and their retirees lost more than $1.2 billion in retirement 
savings.
  Sadly, that includes Janice Farmer, a former Enron employee who is 
now a retiree. She lives in Orlando. Janice Farmer lost her whole 
savings--$700,000--in her retirement plan with Enron.
  Then, if you will recall, the pension fund of the State of Florida 
lost $335 million--more losses than any other State--from Enron stock 
purchases.
  When we had a hearing in the Commerce Committee with the managers of 
Florida's pension fund, which covers all of our public employees in 
Florida, the testimony came out that the money managers of that fund 
were buying Enron shares based on the management's and the company's 
assertions that everything was OK. But it wasn't. The stock was 
dropping like a rock, but, oh, by the way, not before company 
executives had unloaded their shares.
  In the last 18 months alone, we have seen corporate abuses of 
monumental proportions. People have had it. Their representatives in 
Congress, I hope, have had it. I can tell you I have had it. So has my 
colleague, Senator Levin. Eventually, after we have to go through all 
the parliamentary rankling, we will be allowed to offer our amendment.
  We must act now to protect taxpayers and employees and investors. We 
must prevent huge losses for public institutional investors.
  Now we are looking sadly as thousands of layoffs, earnings and 
restatements by more than 300 companies with billions of dollars lost 
by ordinary people. The victims are the ones demanding the reforms that 
we are talking about today. Unfortunately, because of the objections 
rendered by that side of the aisle, we are not able to take that up 
today.
  Those victims and the American people who believe in a strong economy 
want us to act strongly and swiftly to punish such corporate abuse and 
to prevent corporate abuse. That is why Senator Levin and I want to 
introduce stronger enforcement measures.
  We have a package of three amendments. They complement the Sarbanes 
bill by streamlining and strengthening procedures to punish corporate 
and auditor misconduct.
  There is a glaring shortcoming of our current statutes. The 
Securities and Exchange Commission is essentially powerless today, even 
after conducting an investigation and even after finding

[[Page S6568]]

wrongdoing. What the SEC needs is more enforcement authority.
  The amendments that Senator Levin and I are offering will strengthen 
civil penalties and provide for more enforcement authority over 
corporate misconduct. And it will do it in several ways.
  First, these amendments will grant the SEC administrative authority 
to ban unfit officers and directors from publicly traded corporations. 
And the SEC will be able to do so without having to go through the 
lengthy court proceedings in advance that makes it so difficult under 
the present law to get anything done. Their decisions, however, will be 
subject to judicial review so that we have the checks and balances.
  Yesterday, the President gave a speech on Wall Street. He echoed the 
idea that unscrupulous officers and directors should not be able to 
serve in that capacity again. But he offered nothing to enforce that 
principle.
  I hope the President will realize that he was a day late and a dollar 
short--that his proposal did not have the strength and the backbone 
behind it. What we offer here will allow the SEC to have the authority 
to remove crooked executives.

  This amendment also will increase the maximum civil fines that the 
SEC can impose on violators of securities laws and increase those by 
manyfold. Future fines against crooked executives would range from 
$100,000 up to $2 million. Right now some of the fines are only $6,500. 
When you are dealing with white-collar crime, you have to hit the 
criminals where it hurts--in the pocketbook.
  Our amendment also broadens the authority of the SEC to impose fines 
on companies, officers, directors, auditors, and lawyers. Currently, 
the Commission can only impose fines on narrow categories of regulated 
individuals, such as brokers and dealers. But this amendment would 
allow the SEC to cast the net wider and go after a broad range of bad 
actors who engage in fraudulent conduct.
  Earlier this year, Senator Carnahan and I introduced legislation 
advocating that the SEC take a tough enforcement approach, including 
criminal prosecutions whenever necessary. We also sought to end the 
cozy relationships among company executives, auditors, and directors, 
money managers, analysts, lawyers, and others who create this 
incestuous kind of relationship that does nothing but undermine the 
confidence of the American people in the corporate structure of this 
country.
  Senator Levin and I are glad to see that a consensus is coming to 
embrace this approach, and if the other side of the aisle will ever let 
us bring this to a vote, it will be widely accepted in this body.
  The recent Enrons, WorldComs, and other financial tragedies have 
demonstrated that white-collar crimes can be incredibly damaging--
robbing hard-working Americans of their jobs, their savings, and their 
retirements.
  There is simply no justification for handling corporate wrongdoers 
with kid gloves. Earlier today Senator Leahy pointed out that if you 
defraud the public you must go to jail.
  I came over here hoping that I could give a speech to support Senator 
Levin before we adopted this amendment. But I guess it is going to be 
Friday, or if they drag us on, I guess it will be Monday, or Tuesday. 
But we will pass this amendment, and we will pass this bill. It is a 
reflection of the will of the American people to keep our country 
strong and to keep our country free.
  I yield the floor.

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