The U.S. House of Representatives has approved a bill granting the SEC more time to recover money from fraudsters.
The Investor Protection and Capital Markets Fairness Act would give the SEC up to 14 years to bring cases and recoup money for victims of financial abuse, according to a press release from Rep. Ben McAdams, D-Utah, who had introduced the bill with Rep. Bill Huizenga, R-Mich.
The House voted 314-95 in favor of the bill, according to Bloomberg Law.
McAdams says the bill is a response to a 2017 U.S. Supreme Court decision in Kokesh v. SEC, which effectively set a five-year statute of limitations on disgorgement of illegal gains.
The case involved Charles Kokesh, a New Mexico-based investment advisor who was originally ordered to pay a $2.4 million penalty and $34.9 million in disgorgement. But the court determined the SEC had taken too long to build its case. Justice Sonia Sotomayor wrote at the time that disgorgement is essentially a type of penalty and should be subject to the same five-year limit imposed on the SEC’s civil monetary penalties by a 2013 Supreme Court decision.
The SEC estimates that it lost out on collecting around $1.1 billion in ill-gotten gains in the two years since the Kokesh ruling, according to the press release from McAdams’ office.
His bill “would restore the longer period of time allowed for investigation and recovery that was available prior to the 2017 Supreme Court ruling,” McAdams says.
In March, members of the Senate Banking Committee introduced a sister bill to the one passed yesterday in the House.
The Securities Fraud Enforcement and Investor Compensation Act, introduced by Sens. Mark Warner, D-Va., and John Kennedy, R-La., however, would give the SEC only 10 years to recoup money for victims of fraud.