Senators Warner and Kennedy Introduce Bill to Expand SEC Powers to Assist Investors

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On March 14, 2019, Senators Mark Warner (D-Va.) and John Kennedy (R-La.), both members of the Senate Banking Committee, introduced the Securities Fraud Enforcement and Investor Compensation Act. This legislation would give the Securities and Exchange Commission power to seek restitution for retail investors harmed by securities fraud scams.

In many cases, fraudulent investment schemes are not detected for many years. For example, Bernie Madoff was able to defraud investors for decades before his investment fund was revealed to be a Ponzi scheme in 2009. A ruling by the United States Supreme Court in Kokesh v. Securities and Exchange Commission ruled that the SEC must bring disgorgement claims within five years from when the claim accrued. The SEC reported in its 2018 enforcement report that the Court’s ruling could cause the SEC to forgo up to $900 million in disgorgement claims.

The bill addresses this problem by granting the SEC the power to seek a new remedy – restitution – for a period of up to ten years.

A summary of the legislation may be found here.

© Andrew Whiteman 2019


The lawyers at Whiteman Law Firm have been handling securities matters for over 30 years. Please contact us for more information.





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