[Congressional Record Volume 160, Number 134 (Thursday, September 18, 2014)]
[Senate]
[Page S5788]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Levin, Mr. Markey, Mrs. Shaheen, 
        and Ms. Warren):
  S. 2868. A bill to establish a statute of limitations for certain 
actions of the Securities and Exchange Commission, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I am introducing legislation that 
extends the time period the Securities and Exchange Commission, SEC, 
would have to seek civil monetary penalties for securities law 
violations.
  This legislation is necessary in light of the Supreme Court's 
decision in Gabelli v. SEC in which the Court held that the 5 year 
clock to take action aginst wrongdoing starts when the fraud occurs, 
not when it is discovered. In effect, Gabelli has made the SEC's job of 
protecting investors even tougher by shortening the amount of time that 
the SEC has to investigate and pursue securities law violations.
  Financial fraud has evolved significantly over the years and now 
involves multiple parties, complex financial products, and elaborate 
transactions that are executed in a variety of securities markets, both 
domestic and foreign. As a result, many of the critical facts necessary 
to initiate an action may go undetected for years. Securities law 
violators may simply run out the clock, now with greater ease in the 
aftermath of Gabelli.
  Couple this with the fact that while we have given the SEC even 
greater responsibilities, Congress, despite my ongoing efforts to urge 
otherwise, has not provided the agency with all the resources necessary 
to carry out its duties. SEC Chair White recently testified before the 
Banking Committee that ``if the SEC does not receive sufficient 
additional resources, the agency will be unable to fully build out its 
technology and hire the industry experts and other staff needed to 
oversee and police our areas of responsibility, especially in light of 
the expanding size and complexity of our overall regulatory space.''
  To give just one example of the impact of this resource shortfall, 
Chair White also testified that ``in 2004, the SEC had 19 examiners per 
trillion dollars in investment adviser assets under management. Today, 
we have only 8.''
  This legislation would address these challenges by giving the SEC the 
breathing room it needs to better police our markets and protect 
investors. Specifically, this bill extends the time period the SEC has 
to seek civil monetary penalties from five years to ten years, thereby 
strengthening the integrity of our markets, better protecting public 
investors, and empowering the SEC to investigate and pursue more 
securities law violators, particularly those most sophisticated at 
evading detection.
  In so doing, the bill would align the SEC's statute of limitations 
with the limitations period applicable to complex civil financial fraud 
actions initiated pursuant to the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, FIRREA. For over 2 decades, the 
Department of Justice has benefited from FIRREA, which allows the DOJ 
to seek civil penalties within a 10-year time period against persons 
who have committed fraud against financial institutions. The SEC, which 
pursues similarly complex financial fraud cases, should have the same 
time necessary to bring wrongdoers that violate the securities laws to 
justice.
  I urge my colleagues to join me in supporting this legislation.
                                 ______