NEWS RELEASE
Committee on Energy and Commerce Democrats
Congressman John D. Dingell, Ranking Member

GAO COMMITS TO REPORT TO DINGELL, FRANK, KANJORSKI BY JULY 15, 2005 ON SEC, CFTC FINES AND DISGORGEMENT COLLECTIONS

Washington, D.C. – Rep. John D. Dingell (D-Mich), Ranking Member of the House
Committee on Energy and Commerce, today released a commitment letter dated December 21, 2005, from the Government Accountability Office (GAO), agreeing to submit a report by July 15, 2004, to Reps. Dingell, Barney Frank, Ranking Member of the House Committee on Financial Services, and Paul E. Kanjorski, Ranking Member of that committee’s Subcommittee on Capital Markets, on the findings of GAO’s in-depth review of Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) oversight, collection, and management of fines and disgorgements. The work was requested by the lawmakers in letters dated August 14, 2003 (fines) and November 13, 2002 (disgorgement).

GAO’s study will:

(1) assess the capability of SEC and CFTC to effectively track and manage fines and disgorgement data;

(2) assess the status of SEC and CFTC efforts to address previous GAO recommendations, and evaluate the effectiveness of their actions; and

(3) assess the impact of Section 308 of the Sarbanes-Oxley Act (i.e., Fair Funds) on SEC’s ability to return more money to harmed investors and the impact on the ability of harmed investors to pursue litigation.

Every year investors lose money to individuals and corporations that violate federal securities laws. Part of the mission of the SEC is to deter such violations and, where possible, return lost funds to defrauded investors. One of the SEC’s primary tools for achieving these goals is the disgorgement order, which requires violators to give up money obtained through securities law violations. Levying fines is an important mechanism that regulators use to sanction those who violate securities and futures industry rules. For both of these tools to be effective, however, regulators must have effective collection programs. “With the business community gearing up for major onslaughts against the Sarbanes-Oxley Act, the SEC, the Public Company Accounting Oversight Board, and FASB, and with financial fraud still at high levels, it is important that we redouble our efforts to maintain high levels of investor protection and confidence in our markets. I support the efforts of my colleagues to achieve that important goal,” Dingell said.

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