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US Securities and Exchange Commission

Senate Bill Would Create SEC-Led Database of Securities Law Violators, Other Offenders

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

Sen. John Kennedy, a Louisiana Republican, on March 1, 2022, introduced legislation to create an SEC-overseen database of individuals convicted or held liable for securities law violations or other misconduct related to financial services. Under S. 3716, the Tracking Bad Actors Act, federal financial regulators would have three years to stand up the database.

“Financial fraudsters prey on investors like vultures,” Kennedy said in a statement. “The Tracking Bad Actors Act would help expose these offenders to protect American families and workers against financial fraud.”

The measure is cosponsored by Sen. Cynthia Lummis, a Wyoming Republican who in a statement cast the database as a way for people “to easily search a database to determine if their accountant or financial manager has broken federal financial laws.”

The bill would direct the SEC, PCAOB, Office of the Comptroller of the Currency (OCC), Commodity Futures Trading Commission (CFTC), and Federal Deposit Insurance Corp. (FDIC) to jointly establish the database of “persons convicted or held liable in criminal, civil, and administrative actions relating to financial services” brought by the regulators, to the greatest extent practicable, as well as the Department of Justice, self-regulatory organizations (SROs) if required by the regulators overseeing them, or state or local law enforcement and regulators that voluntarily submit the information, according to the bill text.

The SEC would be the lead agency responsible for the database, which would be open and free of charge to the public, and operated by either a federal agency or third party. Information would be expunged in the case that an enforcement action is overturned on judicial review or withdrawn by the regulator, according to the text.

The bill also tasks the financial regulators to jointly submit an annual report to congress on the database until it is operational.


This article originally appeared in the March 3, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.

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