The SEC would be given more time and muscle to get money from fraudsters who prey on investors under new legislation approved by a House committee last week.

The House Financial Services Committee approved H.R. 4344 from Reps. Ben McAdams (D-Utah) and Bill Huizenga (R-Mich.), which would overturn the 2017 Kokesh v. SEC decision. That Supreme Court decision gave the Securities and Exchange Commission only five years to seek disgorgement of ill-gotten funds, forcing the agency to miss out on billions of dollars for defrauded investors, according to the agency.

The legislation McAdams and Huizenga introduced Sept. 17 would create a 14-year statute of limitations. An earlier draft of the measure had no such restriction. The vote sending the bill to the full House was 49-5.

“This bill is a compromise, as some have argued against the statute of limitations and others have argued for a shorter time period,” McAdams said. “I believe that the 14-year statute of limitations provided in this bill gives the SEC sufficient time to prosecute wrongdoers and would cover almost all major securities violations.”

H.R. 4344 followed calls from SEC Chairman Jay Clayton for Congress to give the agency more power to get money back from Ponzi schemers and other bad actors after the Kokesh decision. It has parallels to bipartisan Senate legislation introduced in March.

The SEC estimated that the decision cost the agency the opportunity to recover billions of dollars for investors. “Protecting retail investors is a multifaceted effort and includes putting money back in their pockets when they are harmed by violations of the federal securities laws. The impact of Kokesh was immediate,” Clayton said at an SEC conference earlier this year.

Clayton said he was “troubled by the substantial amount of losses that we may not be able to recover for retail investors as a result of Ponzi schemes and similar long-running, well-concealed frauds that are perpetrated by smooth talking ‘investment professionals.’”

Clayton has backed the Senate version of the bill, the Securities Fraud Enforcement and Investor Compensation Act (S. 799). The legislation from Sens. Mark Warner (D-Va.) and John Kennedy (R-La.) would set a statute of limitations on pursuing compensation for investors at 10 years.

“What is clear is that absent congressional intervention, the SEC will continue to face challenges in obtaining the full measure of ill-gotten gains in long-running, resource-intensive investigations,” said Matthew C. Solomon, a partner in the Washington, D.C., office of law firm Cleary Gottlieb.

Mitch Anthony, co-founder of and and a columnist for Financial Advisor magazine, has been advocating for an extended statute of limitations on federal financial crimes for three years, since both he and his mother discovered they had been ripped off by a trusted accountant and real estate developer who promised 18% returns.

Anthony was defrauded out of $600,000 and his mother invested and lost her entire nestegg, part of which the accountant has paid back.

“Once you discover you have been defrauded, very likely two to three years have passed. Legal proceedings will chew up a year or two. By the time prosecutors decide there is merit in proceeding, the time has almost run out, and they will cease their efforts knowing they are up against the statute,” said Anthony, who has written about the ordeal in his Financial Advisor column.

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