Jack Reed, Democrat from Rhode Island, and Chuck Grassley, Republican from Iowa, want the Securities and Exchange Commission to be able to levy fines equal to the amount of investor losses in the most serious fraud cases. The lawmakers cited the recent case of two former Bear Stearns hedge fund managers who were charged with fraud that cost investors $1.6bn. The SEC settled with both for a total amount of about $1m.
The SEC has been repeatedly criticised for reaching allegedly lax settlements with companies accused of violating securities laws. In a 2011 case against Citigroup, a federal judge refused to approve a settlement in part because the SEC had demanded mere “pocket change” from a big bank accused of misleading buyers of a mortgage-related security.
The SEC subsequently requested more authority from Congress to levy larger fines, as did Barack Obama, the president, who asked that Congress strengthen the SEC’s ability to mete out stiffer penalties against companies accused of repeatedly violating antifraud laws.
Read more: http://www.ft.com/intl/cms/s/0/ae5c0e1e-d443-11e1-942c-00144feabdc0.html#axzz21PY3xPj3
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