Ryan Votes for Tougher Punishment for Corporate Fraud

WASHINGTON, D.C. – Wisconsin’s First District Congressman Paul Ryan today voted for legislation that toughens penalties for corporate wrongdoers who engage in fraud and strengthens laws that criminalize document shredding and other forms of obstruction of justice. This legislation – H.R. 5118, the Corporate Fraud Accountability Act of 2002 – passed the U.S. House of Representatives by a vote of 391-28.

"We have to insist on honesty, integrity and accountability all across America’s corporate landscape," Ryan said. "The strength of our economy and Americans’ job and retirement security depend on good business ethics. Without this, all of us lose. Wisconsin’s workers, investors, and honest businessmen and women need to be able to rely on a responsible marketplace that provides accurate information we can trust."

"The measure we passed today would help crack down on corporate criminals, so that they face heavy consequences for their serious crimes," Ryan said.

H.R. 5118 would provide for increased penalties for corporate crime at publicly traded companies. Specifically, the measure would:

• Increase the maximum jail terms for mail and wire fraud from five years to 20 years and create a new "securities fraud" section that carries a maximum prison term of 25 years.
• Strengthen laws that criminalize document shredding and other forms of obstruction of justice and provide a maximum penalty of 20 years for such violation.
• Grant emergency authority to the U.S. Sentencing Commission to promulgate guidelines that reflect the serious nature of securities, pension, and accounting fraud.
• Close loopholes by which corporate officers can use bankruptcy laws to discharge liabilities based on securities fraud.
• Require top corporate executives to certify that the financial statements of the company fairly and accurately represent the financial condition of the company. Willfully violating these provisions can subject corporate executives to fines of up to $5 million and 20 years in prison.
• Increase the criminal penalties for an individual who files a false statement with the Securities Exchange Commission (SEC) to a maximum fine of $5 million and 20 years in prison. For corporations that file false statements, the fine would be increased up to a maximum of $25 million.
• Authorize the SEC – during an investigation – to seek an order in federal court freezing extraordinary payments to corporate executives. This order, which could last for 45 days, would require the payments to be escrowed, ensuring that corporate assets are not improperly taken for an executive’s personal benefit. The order could be extended for another 45 days by the court upon a showing of good cause.
• Enable the SEC to ban CEOs and other officers who clearly abuse their power from serving in any corporate leadership position.