SEC Has Toughened Enforcement Efforts, Agency Says
National News
The Securities and Exchange Commission's chief enforcement official says the agency has toughened its efforts to shut down financial misconduct after failing to act quickly in the cases of R. Allen Stanford and Bernard Madoff.
SEC Enforcement Director Robert Khuzami says in testimony prepared for a Senate hearing that "we have moved aggressively" to put in place reforms recommended by the SEC inspector general. The IG found that the SEC knew since 1997 that Stanford likely was operating a Ponzi scheme but waited 12 years to bring fraud charges against the billionaire.
Khuzami also tells the Senate Banking Committee the SEC is working to provide "maximum recovery" to investors hurt in Stanford's alleged $7 billion fraud.
Stanford has been in federal prison since his indictment in June 2009 on criminal charges that his international banking business was really a pyramid scheme. He is disputing the charges. He faces a life sentence if convicted.
The SEC didn't bring civil fraud charges against Stanford until February 2009. SEC Inspector General David Kotz said in a report issued in April that "institutional influence" in the enforcement division was a factor in the agency's repeated decisions not to conduct a full investigation.
The report found that SEC enforcement officials discouraged cases that couldn't be resolved quickly. And it said an SEC enforcement official who helped quash investigations later legally represented Stanford.
The SEC's office in Fort Worth, Texas, had conducted "examination after examination" of Stanford's business over eight years, but "merely watched the alleged fraud grow, and failed to take any action to stop it," Kotz testified at Wednesday's hearing.
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Workers’ Compensation Subrogation of Administrative Fees and Costs
When a worker covered by workers’ compensation makes a claim against a third party, the workers’ compensation insurance retains the right to subrogate against any recovery from that third party for all benefits paid to or on behalf of a claimant injured at work. When subrogating for more than basic medical and indemnity benefits, the Texas workers’ compensation subrogation statute provides that “the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” TX Labor Code § 417.002.
In fact, all 50 states provide for similar subrogation. However, none of them precisely outlines which payments or costs paid by a compensation carrier constitute “compensation” and can be recovered. The result is industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and can’t be included in a carrier’s lien for recovery purposes.
In addition to medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages and loss of earning capacity resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, rehabilitation benefits, nurse case worker fees, and other similar fees. They also incur other expenses in conjunction with the handling and adjusting of workers’ compensation claims. Workers’ compensation carriers typically assert, of course, that, they are entitled to reimbursement for such expenditures when it recovers its workers’ compensation lien. Injured workers and their attorneys disagree.