[Congressional Record (Bound Edition), Volume 155 (2009), Part 21]
[House]
[Pages 28980-28982]
[From the U.S. Government Publishing Office, www.gpo.gov]




               ENHANCED S.E.C. ENFORCEMENT AUTHORITY ACT

  Mr. KANJORSKI. Madam Speaker, I move to suspend the rules and pass 
the bill (H.R. 2873) to provide enhanced enforcement authority to the 
Securities and Exchange Commission, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2873

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Enhanced S.E.C. Enforcement 
     Authority Act''.

     SEC. 2. NATIONWIDE SERVICE OF PROCESS.

       (a) Securities Act of 1933.--Section 22(a) of the 
     Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
     inserting after the second sentence the following: ``In any 
     civil action instituted by the Commission under this title in 
     a United States district court for any judicial district, 
     subpoenas issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.
       (b) Securities Exchange Act of 1934.--Section 27 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended 
     by inserting after the third sentence the following: ``In any 
     civil action instituted by the Commission under this title in 
     a United States district court for any judicial district, 
     subpoenas issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.
       (c) Investment Company Act of 1940.--Section 44 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-43) is amended 
     by inserting after the fourth sentence the following: ``In 
     any civil action instituted by the Commission under this 
     title in a United States district court for any judicial 
     district, subpoenas issued to compel the attendance of 
     witnesses or the production of documents or tangible things 
     (or both) at any hearing or trial may be served at any place 
     within the United States. Rule 45(c)(3)(A)(ii) of the Federal 
     Rules of Civil Procedure does not apply to a subpoena so 
     issued.''.
       (d) Investment Advisers Act of 1940.--Section 214 of the 
     Investment Advisers Act

[[Page 28981]]

     of 1940 (15 U.S.C. 80b-14) is amended by inserting after the 
     third sentence the following: ``In any civil action 
     instituted by the Commission under this title in a United 
     States district court for any judicial district, subpoenas 
     issued to compel the attendance of witnesses or the 
     production of documents or tangible things (or both) at any 
     hearing or trial may be served at any place within the United 
     States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil 
     Procedure does not apply to a subpoena so issued.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Kanjorski) and the gentleman from California (Mr. 
Campbell) each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania.


                             General Leave

  Mr. KANJORSKI. Madam Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks on this legislation and to insert extraneous material 
thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. KANJORSKI. Madam Speaker, I yield myself such time as I may 
consume and rise today to speak in support of H.R. 2873, the Enhanced 
S.E.C. Enforcement Authority Act, and to congratulate the gentleman 
from California (Mr. Campbell) for his work on these matters.

                              {time}  1200

  H.R. 2873 enjoys bipartisan support and previously passed the House 
in a slightly different form as part of the Securities Act of 2008 in 
the 110th Congress. In the 111th Congress, we've also incorporated this 
commonsense legislative reform in the Investors Protection Act of 2009. 
The House Financial Services Committee recently approved the Investors 
Protection Act, and that bill will come to the House floor in the near 
future as part of the broader financial services regulatory reform 
package.
  The U.S. Securities and Exchange Commission currently has nationwide 
service of process of subpoenas in administrative proceedings. This 
bill will enhance the Commission's enforcement program by allowing 
subpoenas to be served nationwide in civil actions brought by the 
agency in Federal court. Currently, the Commission can issue a subpoena 
only within the Federal jurisdictional district where a trial takes 
place or within 100 miles of the courthouse. Witnesses in civil cases 
brought by the Commission are, however, often located outside of a 
trial court's subpoena range.
  With the proliferation of Internet scams that are perpetrated in 
multiple States, this quirk in the law has hampered the Commission's 
ability to efficiently and effectively mount its cases. Unless 
witnesses volunteer to appear at civil trials, the Commission must take 
depositions where the witnesses are located and use their written or 
videotaped deposition testimony at trial. Because of the associated 
travel for numerous lawyers and associates that must be present, 
depositions are generally more expensive than having a witness attend a 
trial.
  H.R. 2873 would fix this problem by allowing the Commission to have 
nationwide service of process just as it currently has for its 
administrative proceedings. These changes in subpoena procedures for 
civil cases would apply to the Securities Exchange Act of 1933, the 
Securities Exchange Act of 1934, the Investment Company Act of 1940, 
and the Investment Advisers Act of 1940. Nationwide service of process 
would produce a number of substantial advantages, including a 
significant savings in terms of travel costs and staff time.
  During these difficult economic times, we need to ensure that Federal 
agencies operate more efficiently. Additionally, we need to ensure that 
the Commission maximizes its limited resources to investigate and 
resolve wrongdoing in our securities markets. H.R. 2873 achieves both 
of these important objectives.
  Moreover, the bill that the House is considering today incorporates 
the recommendations of the Commission, the Justice Department and our 
colleagues on the House Judiciary Committee. The consensus legislation, 
therefore, not only has bipartisan support in the House but it also has 
support from within the administration and across committee 
jurisdictions in the House. In short, H.R. 2873 is a commonsense bill 
that will allow the U.S. Securities and Exchange Commission to operate 
more efficiently.
  Madam Speaker, I again commend the gentleman from California for his 
work on these matters, and I urge my colleagues to support this bill.
  I reserve the balance of my time.
  Mr. CAMPBELL. Mr. Speaker, I yield myself such time as I may consume.
  I would like to thank my colleague from Pennsylvania (Mr. Kanjorski) 
for his support of this bill and his kind words about this bill. I 
would also like to thank the Judiciary Committee for working with us on 
the Financial Services Committee to come up with language that is 
mutually acceptable and works for everyone on this bill.
  In light of the recent Wall Street scandals with Bernie Madoff and 
Stanford and others, we think it's appropriate to grant the Securities 
and Exchange Commission some additional enforcement tools that they 
need to fight fraud and corruption in the markets. As Mr. Kanjorski 
suggested--and I won't repeat the details of the bill which he 
accurately described--but if you think about it, most of these SEC 
enforcement issues will involve investors and perhaps conspirators from 
all over the country. But yet under current law, the SEC only has the 
authority to subpoena someone if they live within 100 miles of the 
Federal courthouse in which the trial is held.
  So this means that if they need witness testimony from a victim, from 
a co-conspirator, from somebody involved with the investment, from 
somebody who participated in the alleged crime or who was a victim of 
the alleged crime, they have to get a deposition from them if they live 
more than 100 miles outside of the courthouse. Those depositions can be 
costly, difficult to get, and they clearly are not as effective in a 
trial circumstance as a witness actually in the trial.
  This bill would correct that and simply give the SEC the same 
enforcement capabilities, the same subpoena capabilities that many 
other Federal enforcement agencies have in similar circumstances.
  So I appreciate the bipartisan support. I appreciate the comments.
  I reserve the balance of my time.
  Mr. KANJORSKI. Mr. Speaker, I have no further requests for time and 
yield back the balance of my time.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I stand here today in support 
of H.R. 2873, the Enhanced S.E.C. Enforcement Authority Act, which will 
give the Securities and Exchange Commission, SEC, nationwide service of 
process. I support this legislation because I believe that it is 
important that the agency responsible for oversight of our financial 
system have the necessary tools for legal action against potential 
violations of the law.
  I would like to first thank my colleague, Congressman John Campbell, 
for introducing this valuable piece of legislation. On December 11, 
2008, nearly one year ago, Bernard Madoff was arrested for securities 
fraud, money laundering, and perjury in one of the largest Ponzi 
schemes in the history of this country. Estimates of the magnitude of 
the Madoff scheme were between $50 and $65 billion. The presiding judge 
in the case declared the crimes, ``extraordinary evil.'' Congress and 
the American people were appalled by this scandal. The country wondered 
how our regulatory agencies could fail to recognize fraud of this 
magnitude for so long.
  In the year since the Madoff scandal first came to light, both the 
Securities and Exchange Commission and Congress have worked to enhance 
the ability of the SEC to conduct oversight. Internal procedures have 
been reformed to make it easier for the SEC to open investigations into 
violations of securities law. New personnel at the SEC, such as the 
Director of Enforcement, have been hired to ensure that oversight 
efforts were carried out with the appropriate level of enthusiasm. 
Congress has also worked to improve the tools of the SEC to conduct 
oversight. This bill is in line with the effort to reform the oversight 
of securities and ensure that massive fraud that was committed on the 
scale of Bernard Madoff never happens again.
  Currently, the Securities and Exchange Commission has to issue 
subpoenas in the judicial district where the trial takes place or

[[Page 28982]]

within a ``100-mile bulge'' of the courthouse. This unnecessarily 
burdens the staff, which has to travel to the courts where the trial 
takes place, wasting both time and money. Furthermore, by requiring the 
SEC to seek action in remote district courts, civil cases may be 
weakened. Witnesses in cases filed by the SEC are frequently located 
outside of the trial court's subpoena range. Because witnesses who are 
not able to travel would have to provide an alternative to live 
testimony, such as a videotaped deposition or written testimony, the 
impact of their statement is lost. Additionally, securities violations 
using the internet involve persons across jurisdictions.
  H.R. 2873 will streamline the SEC's ability to investigate potential 
cases of violations of securities law. This bill will allow nationwide 
service of subpoenas in civil actions brought by the SEC in Federal 
courts. By granting the SEC this authority, this legislation will 
eliminate repetitive depositions. While the Congressional Budget Office 
has not scored this legislation, logically, this legislation will 
reduce costs for the SEC. The costs of creating and presenting 
videotaped depositions will be reduced. Additionally, SEC staff will no 
longer have to travel to file motions in remote district courts, saving 
the staff time and the taxpayer money.
  Other agencies with similar mandates have long had the authority for 
nationwide service. This body has already considered and passed this 
provision: during the 110th Congress, the House of Representatives 
passed a law of this nature in Section 19 of H.R. 6513, the Securities 
Act of 2008. Furthermore, the SEC already has this authority in 
administrative proceedings.
  Mr. CAMPBELL. I will yield back the balance of my time as well.
  The SPEAKER pro tempore (Mr. Blumenauer). The question is on the 
motion offered by the gentleman from Pennsylvania (Mr. Kanjorski) that 
the House suspend the rules and pass the bill, H.R. 2873, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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