October 03, 2005
The GAO not Impressed with Funds Disbursement by SEC
"Oct 3, 2005 — WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission has returned to investors only a small fraction of the $4.8 billion collected under a post-Enron program for penalizing violators of securities laws and returning the money to those harmed, said a congressional watchdog on Monday.
The Government Accountability Office (GAO), Congress' investigative arm, also criticized the SEC for shortcomings in efforts to track collections of fines imposed on violators, as well as for its management of stepped-up collection efforts.
The GAO said in a draft report that the SEC has vigorously exploited the Fair Fund program adopted by Congress as part of a reaction to the corporate scandals that started in 2001.
The program gave the SEC new power to return to investors money paid out as punishment by corporate wrongdoers.
"However, to date, only a small amount of the funds have been distributed. According to SEC, distribution is often a lengthy process … We also found that SEC lacked a reliable method by which to identify and collect data on Fair Fund cases," the GAO said in the draft report's findings.
The GAO said the SEC estimated that as of April 2005 it had designated $4.8 billion in penalties and disgorgements to be returned to harmed investors. But only about $60 million had been distributed and another $25 million was being readied for disbursement at the time of the GAO's review, the GAO said.
Pennsylvania Democratic Rep. Paul Kanjorski said he was pleased the GAO found that the SEC had made some progress on collecting fines, and that some Fair Funds had been disbursed.
But he said, "I am deeply troubled by the difficulties the agency has encountered in expeditiously returning these funds to American investors."
He and Massachusetts Democratic Rep. Barney Frank called for congressional hearings to be held on the issue. Both lawmakers sit on the House of Representatives Financial Services Committee, which oversees the SEC. " Click here for the complete article.
To find out more about how your company can comply rapidly and effectively with Sarbanes-Oxley, see www.issuescentral.com and learn more about Compliance Playbook(tm).
The Government Accountability Office (GAO), Congress' investigative arm, also criticized the SEC for shortcomings in efforts to track collections of fines imposed on violators, as well as for its management of stepped-up collection efforts.
The GAO said in a draft report that the SEC has vigorously exploited the Fair Fund program adopted by Congress as part of a reaction to the corporate scandals that started in 2001.
The program gave the SEC new power to return to investors money paid out as punishment by corporate wrongdoers.
"However, to date, only a small amount of the funds have been distributed. According to SEC, distribution is often a lengthy process … We also found that SEC lacked a reliable method by which to identify and collect data on Fair Fund cases," the GAO said in the draft report's findings.
The GAO said the SEC estimated that as of April 2005 it had designated $4.8 billion in penalties and disgorgements to be returned to harmed investors. But only about $60 million had been distributed and another $25 million was being readied for disbursement at the time of the GAO's review, the GAO said.
Pennsylvania Democratic Rep. Paul Kanjorski said he was pleased the GAO found that the SEC had made some progress on collecting fines, and that some Fair Funds had been disbursed.
But he said, "I am deeply troubled by the difficulties the agency has encountered in expeditiously returning these funds to American investors."
He and Massachusetts Democratic Rep. Barney Frank called for congressional hearings to be held on the issue. Both lawmakers sit on the House of Representatives Financial Services Committee, which oversees the SEC. " Click here for the complete article.
To find out more about how your company can comply rapidly and effectively with Sarbanes-Oxley, see www.issuescentral.com and learn more about Compliance Playbook(tm).
