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Attorney General Lockyer Announces Proposal to Strengthen California Laws to Protect Investors And Fight Corporate Fraud
(SAN FRANCISCO) – Attorney General Bill Lockyer today proposed new legislation to increase the authority of the Attorney General's Office to enforce state securities fraud laws, protect investors and fight corporate misconduct.
"Markets are risky, and no one is guaranteed a return. But investors should not have to account for lying and cheating when assessing their risk," Lockyer said. "Under my plan, California will be better able to take dishonesty out of the investment equation and hold corporate criminals accountable."
Lockyer's proposal would give the Attorney General's Office concurrent authority with the Commissioner of Corporations to investigate and prosecute civil violations of state securities laws. Under current law, the Commissioner has exclusive jurisdiction over civil enforcement. Lockyer said authorizing the state's top law enforcement agency to also pursue these cases will better protect California consumers and investors.
The proposal also would require the Commissioner of Corporations to refer criminal violations to the Attorney General's Office. Current law only gives the Commissioner the discretion to refer criminal cases to local prosecutors. In addition, the proposal would criminalize making material false statements to government investigators, bringing California's statutes in line with federal law regarding investigations of violations of securities fraud laws and other statutes.
Lockyer unveiled his proposal at a national conference on "Restoring Corporate Integrity and Public Trust." The event focused on new federal rules to prevent and punish corporate wrongdoing and options for enforcing laws and restoring investor and public confidence in the market.
While the recently-enacted Sarbanes-Oxley Act is an important step to curb corporate abuses at the federal level, Lockyer said states also should play a strong role in battling corporate fraud. California law provides the Attorney General much less authority to enforce securities laws than other states, even though an estimated 60 percent of its residents have a financial stake in the stock market. In New York, for example, the Attorney General administers the securities laws, and has civil and criminal enforcement jurisdiction.
The conference was held in the wake of a string of corporate scandals that have shaken investor confidence, rocked the market and destroyed retirement savings. In California, Lockyer and other officials have been battling to win compensation from energy companies that gouged the state's ratepayers for billions of dollars during the power crisis of 2001-2002.
"The past two years have shown the immense damage done when the corporate conscience fails to properly check corporate greed," said Lockyer. "Workers lose their jobs and pensions. Families lose their life savings. Investors lose their confidence. The market collapses."
Other Attorneys General who participated in the conference included event co-sponsor Carla Stovall of Kansas, Christine Gregoire of Washington, Don Stenberg of Nebraska and David Samson of New Jersey. Notable panelists also included: Nobel Laureate Milton Friedman; Richard Grasso, chairman of the New York Stock Exchange; columnist Arianna Huffington; David Gergen, director of Harvard University's Center for Public Leadership; and Marvin Kalb of the Shorenstein Center.