[Congressional Record Volume 154, Number 143 (Wednesday, September 10, 2008)]
[Extensions of Remarks]
[Pages E1756-E1757]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         SECURITIES ACT OF 2008

                                 ______
                                 

                               speech of

                        HON. SHEILA JACKSON-LEE

                                of texas

                    in the house of representatives

                       Tuesday, September 9, 2008

  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of H.R. 
6513, the Securities Act of 2008 by my colleague from Pennsylvania, 
Congressman Paul Kanjorski and the Financial Services for their work in 
this important area.
  Ensuring our markets are functioning properly at a time when we are 
approaching a recession should be a priority for us all. Many of the 
provisions in H.R. 6513, were recommended to the committee by the 
Securities and Exchange Commission (SEC) and that the act has the 
support of the SEC and State securities regulators.
  The unanimous and bipartisan passage of H.R. 6513 in committee 
acknowledges that we must act now to protect our Nation's financial 
future.


                  BACKGROUND AND BREAKDOWN ON THE BILL

  This act would amend numerous provisions within the Securities Act of 
1933, the Securities Exchange Act of 1934, the Investment Company Act 
of 1940, and the Investment Advisers Act of 1940. The changes 
potentially affect not only securities firms, but also public companies 
and anyone else subject to the Federal securities laws.

Penalties in cease and desist proceedings

  Section 8A of the Securities Act would be amended by adding a new 
provision that

[[Page E1757]]

would provide the SEC with the authority to impose civil money 
penalties in cease and desist proceedings before an SEC administrative 
law judge, against anyone alleged to have violated the act.
  It also sets out a method by which a respondent subject to the 
penalty provisions may offer evidence on his or her ability to pay such 
fines and the impact of such fines on his or her ability to continue in 
business. The proposed provision contains tiers for the penalties as 
follows:
  First Tier: Establishes a maximum penalty of $6,500 for each 
violative act or omission committed by any natural period, and a 
$65,000 cap for each violative act or omission committed by any other 
person, that constitutes a violation of the Securities Act or any 
regulation.
  Second Tier: increases the maximum penalties to $65,000 for natural 
persons and $325,000 for all other persons for each act or omission 
that involves fraud, deceit, manipulation, or deliberate or reckless 
disregard of a regulatory requirement.
  Third Tier: Sets a maximum penalty of $130,000 for a natural person 
or $650,000 for all other persons if the act or omission involves 
fraud, deceit, manipulation, or deliberate or reckless disregard of a 
regulatory requirement and such act or omission directly or indirectly 
resulted in substantial losses or created a significant risk of 
substantial losses to other persons.
  With the many issues that come under the Securities Act--amendments 
to the sections dealing with fraud and reckless disregard of other 
people's money is a serious but necessary step in the right direction. 
This act would authorize the SEC to impose civil penalties in cease and 
desist proceedings against any defendant before administrative law 
judges.
  The expansion of the SEC's civil money penalty authority in 
administrative proceedings to include all potential defendants, not 
just securities industry firms and professionals, will likely be the 
most controversial aspect of the bill. Since the Federal Rules of 
Evidence do not apply in administrative proceedings, the SEC may use 
evidence that would not be admissible in Federal district court.

SEC authority over formerly associated persons

  H.R. 6513 empowers the SEC to remove from office or censure any 
person who is, or at time of the alleged misconduct was, a member of 
the Municipal Securities Rulemaking Board.
  It would also provide the SEC and other regulatory agencies the 
authority to institute disciplinary proceedings against persons 
associated with or seeking to become associated, or who at the time of 
the alleged misconduct were associated or seeking to become associated 
with, registered or unregistered government securities brokers and 
dealers.

  H.R. 6513 would also provide the SEC with the authority to conduct 
investigations into alleged violations committed by individuals who 
were formerly associated with members of national securities exchanges 
and national securities associations, as well as former participants of 
registered clearing agencies.
  It would expand the disciplinary authority of the regulatory agencies 
of the self-regulatory organizations by providing the regulatory 
agencies with the authority to remove from office or censure persons 
who, at the time of the alleged misconduct, either are or were officers 
of self-regulatory organizations.

Scope of exemption from State securities registration

  This section allows the NYSE, AMEX, or Nasdaq to establish tiers on 
which stocks can be listed and traded, even if those stocks would not 
otherwise qualify as covered securities exempt from state registration 
requirements.

Collateral bars

  The act would amend provisions of the Exchange Act and Advisers Act 
to prevent associated persons who violate the Federal securities laws 
in one capacity (e.g., as an associated person of a broker or dealer) 
from being associated with other securities businesses in a different 
capacity (e.g., as an associated person of an investment adviser).
  Currently, the law does not permit the SEC to bar someone whose 
misconduct occurred while associated with a broker-dealer from 
associating with an investment adviser (or vice-versa), although the 
SEC often seeks such a collateral bar in settlements.

Exempt offerings

  This amendment would clarify that States can require that notice 
filings for exempt securities contain all of the information required 
by Form D including the appendix to Form D.

Unlawful margin lending

  This section of the act would add clarification to the current 
problematic reading of the section.

SIPA

  This section amends certain provisions of the Securities Investor 
Protection Act of 1970 (``SIPA'') to add securities futures and options 
on securities futures to the list of covered claims a customer can make 
against a broker-dealer that the Securities Investor Protection 
Corporation (``SIPC'') will cover. These amendments are a positive step 
toward removing regulatory road blocks to effective portfolio margining 
that can fully realize the benefits of hedging securities positions 
with futures positions.

Application of Advisers Act to State-registered advisers

  This amendment will clarify that certain hedge fund and private 
equity advisers, who may be subject to State (but not SEC) 
registration, may charge performance fees that would not be permitted 
for most SEC registrants.

Sharing privileged information with other authorities

  The act would add a new subsection to Section 24 of the Exchange Act. 
The new subsection would provide that the SEC shall not be deemed to 
have waived any privilege by sharing information with another agency of 
the U.S. Government, any foreign securities authority, any foreign law 
enforcement authority, or any State securities or law enforcement 
authority.

Nationwide service of subpoenas

  Under the act, when the SEC institutes a proceeding in U.S. district 
court in any district, subpoenas issued by the court to compel 
attendance of witnesses or production of documents may be served in any 
other district. Such subpoenas could be served and enforced without 
application to the court or a showing of cause, notwithstanding 
applicable provisions of the Federal Rules of Civil Procedure.


                               CONCLUSION

  We are facing rising food, gas, and energy costs. Our housing markets 
are still reeling and we are at high levels of unemployment. We must 
ensure that the Securities markets are secure and able to withstand our 
current economic climate. Mr. Speaker, I urge my colleagues to support 
this important legislation.

                          ____________________