Anti-Fraud Added to Reform Bill

Provision Increases Sentences, Extends Statute of Limitations An amendment added to the new draft of the banking regulatory reform bill would add more teeth to the fight against fraud.

Authored by Senator Patrick Leahy (D-VT), this amendment -- if approved with the total reform bill -- would increase sentences for securities fraud and bank fraud. It also would promote more criminal prosecutions by bringing together regulators, investigators and prosecutors to coordinate, root out and investigate financial fraud. Leahy chairs the Senate's Judiciary Committee and had presented this amendment for the Senate version of the reform bill back in May.

Leahy's proposal seeks to increase the tools that law enforcement can use. It also extends the statute of limitations for securities fraud, which has in the past been difficult to identify and complicated to prosecute. The amendment strengthens whistleblower protections by making sure proper incentives are in place to reward whistleblowers who step forward to report fraud and abuse.

"The provisions included in the Wall Street reform legislation will lead to increased sentences for those who commit securities fraud and bank fraud, and strengthen protections for whistleblowers, who often serve as an early warning system to stop fraud before it damages financial institutions and the economy," says Leahy in a statement detailing the amendment.

The amendment proposes to:

  • 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;
  • 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.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.




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