Ted Kaufman - United States Senator for Delaware

Kaufman Seeks To Add Anti-Fraud, Whistleblower Protections To Wall Street Reform Bill

May 4, 2010

WASHINGTON, D.C. – Leading members of the Senate Judiciary Committee Tuesday filed an amendment to the Wall Street reform legislation that will increase law enforcement resources to root out and prosecute financial and securities fraud, and will strengthen protections for whistleblowers who help expose financial fraud.  Along with Senator Ted Kaufman (D-Del.), the amendment is sponsored by Senator Patrick Leahy (D-Vt.), the Committee’s chairman, and Senators Chuck Grassley (R-Iowa) and Arlen Specter (D-Pa.).

“Through the Fraud Enforcement and Recovery Act, Congress has put more cops on the Wall Street beat. But we need to do more,” said Kaufman. “This amendment will help law enforcement efforts by providing prosecutors with tools they need to try the type of fraud that was at the heart of the financial crisis -- and send those who commit such fraud to jail for a long time.  It also adds key whistleblower protections for private citizens who dare to speak out against financial fraud.”
 
“In these difficult economic times, we must make every effort to ensure accountability for the massive wave of fraud on Wall Street and beyond that has so undermined our economy, and we must protect taxpayers from ongoing fraud that could slow our economic recovery,” said Leahy.  “This amendment will help to ensure that those responsible for committing fraud in the financial industry are held fully accountable for their actions.”
 
“Part of reforming the financial system is making sure that the law is free of loopholes and ensuring that those who violated the law cannot escape justice,” Grassley said.  “Our amendment will help make sure that those who seek to do wrong are held accountable.”
 
“I’m pleased to join Senators Leahy, Grassley and Kaufman in proposing an amendment that, among other things, directs the U.S. Sentencing Commission to evaluate and amend the Sentencing Guidelines for securities and financial institution fraud, to reflect Congress’s intent that penalties for these offenses be increased,” said Specter.  “This amendment underscores the importance of sending people to jail as a deterrent to the very white collar crimes that helped facilitate the current recession.”
 
The amendment will increase sentences for securities fraud and bank fraud. Sentences for these offenders are often shorter than those for other white collar offenders whose crimes result in similar loss amounts, and the amendment will close the gap.  The amendment will also promote criminal prosecutions by ensuring that regulators, investigators, and prosecutors coordinate to root out and investigate financial fraud.  The amendment also extends the statute of limitations for securities fraud, which is often difficult to identify and complicated to prosecute.
 
The amendment strengthens whistleblower protections that have been included in other recent legislation and complements those protections already included in the Wall Street reform legislation.  Whistleblowers serve an important role in exposing financial fraud.  The amendment will ensure that the proper incentives are in place to reward whistleblowers who step forward to report fraud and abuse, often at great risk to their careers.
 
The Senate is debating critical reforms to head off the Wall Street fraud and abuses that have so severely impacted the nation’s economy and financial institutions.  On Tuesday, the Senate Judiciary Subcommittee on Crime and Drugs held a hearing to examine whether financial institutions have a fiduciary duty to their clients, and whether those institutions should be criminally liable for violating that duty.  
 
The amendment will:  

  • Close the sentencing gap between securities fraud offenders and other white collar offenders
  • Direct the Sentencing Commission to review and amend the sentencing guidelines for securities and bank fraud
  • Protect criminal investigations by ensuring that regulators, investigators and prosecutors work together to stop financial fraud
  • Require regulators to consult with prosecutors to ensure that important regulatory steps do not inadvertently undermine criminal investigations and prosecutions
  • Ensure that proper incentives are in place to reward whistleblowers who step forward to report fraud and abuse
  • Allow those who move money overseas to evade tax laws to be charged with money laundering, which can result in increased charges and sentences
  • Extend the current statute of limitations for criminal prosecution of federal securities fraud offenses from five to six years, the current statute of limitations for tax evasion

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