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Public Company Accounting Oversight Board transparency bill introduced PDF Print E-mail
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Written by Grassley Press   
Tuesday, 22 November 2011 10:39

Reed and Grassley Seek to Increase Transparency at Accounting Watchdog

 

WASHINGTON, DC – In an effort to protect the investing public and improve the oversight of corporate auditing, U.S. Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) are introducing the PCAOB Enforcement Transparency Act of 2011.

In the wake of a series of corporate accounting scandals, such as Enron, that cost investors billions of dollars and hurt the U.S. economy, Congress established the Public Company Accounting Oversight Board (PCAOB) as a watchdog to oversee auditors of public companies.   The 2002 Sarbanes-Oxley law creating the Board also required PCAOB’s disciplinary proceedings to be kept confidential through charging, hearings, initial decision, and appeal.  Unfortunately, the secretive nature of the process enables firms that engage in misconduct to drag out the proceedings for years while the investing public is kept in the dark.

The Reed-Grassley bill will make PCAOB disciplinary proceedings public to bring auditing deficiencies at the firms or the companies they audit to light in a timely manner and help to deter violations.

“The PCAOB is responsible for ensuring that auditors of public companies meet the highest standards of quality, independence, and ethics.  Reliable financial reporting is vital to the health of our economy and we must take the legislative steps necessary to enhance transparency in the PCAOB’s enforcement process.  Currently, Congress, investors, and others are being denied critical information about an auditor’s disciplinary process.  Investors and companies alike should be aware when the auditors and accountants they rely on have been charged or sanctioned for violating professional auditing standards,” said Reed.

“Sunshine is the best disinfectant,” Grassley said.  “This legislation levels the playing field between auditors reviewed by the SEC and auditors reviewed by the PCAOB.  Currently, PCAOB proceedings are secret while SEC proceedings are not.    The secrecy provides incentives to bad actors to extend the proceedings as long as possible so they can continue to do business without notice to businesses about potential problems with a particular auditor.   This bill ends the secrecy and brings the kind of transparency that adds accountability to agency proceedings.”

The PCAOB sets auditing standards for auditors of public companies, examines the quality of audit performed by public company auditors, and where necessary, imposes disciplinary sanctions on registered auditors and auditing firms.  The PCAOB oversees more than 2,400 auditing firms registered with the Board, as well as the thousands of audit partners and staff who contribute to a firm’s work on each audit.

The lack of transparency surrounding disciplinary proceedings under current law can provide unscrupulous firms with an incentive to litigate cases in order to continue to shield conduct from the public.

For example, an accounting firm that was subject to a disciplinary proceeding issued no fewer than 29 additional audit reports on public companies during the course of the proceedings.  Those public companies and their investors were completely unaware there was a potential auditing problem with this accounting firm.   Before the firm was expelled from public company auditing, it issued those audit reports, knowing all the while that it was subject to disciplinary proceedings.  But investors were denied this information.

PCAOB’s closed proceedings run counter to the public enforcement proceedings of other regulators, including the U.S. Securities and Exchange Commission (SEC), the U.S. Department of Labor, the Federal Deposit Insurance Corporation (FDIC), the U.S. Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA), and others.  Nearly all administrative proceedings brought by the SEC against public companies, brokers, dealers, investment advisers, and others are open, public proceedings.

This Reed-Grassley bill will make PCAOB hearings and all related notices, orders, and motions, open and available to the public unless otherwise ordered by the Board.  The PCAOB procedure would then be similar to SEC Rules of Practice for similar matters, where hearings and related notices, orders, and motions are open and available to the public.

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Facts are STUBBORN Things...Hernandez and Wide Receiver PDF Print E-mail
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Written by Grassley Press   
Tuesday, 22 November 2011 09:52

Senate Judiciary Committee Oversight Hearing with Attorney General Eric Holder, Nov. 8, 2011

Hernandez and Wide Receiver

Senator Feinstein: “My understanding is that the practice of letting guns walk first occurred in 2006 as part of Operation Wide Receiver, and again the next year as part of the Hernandez investigation.”

FACT

Operation Wide Receiver ran from 2006 to 2007, and Assistant Attorney General Lanny Breuer has said that approximately 350 guns were walked in the case.  The Justice Department has produced very few documents from the time period when Wide Receiver was conducted, but what they have provided indicates that the case involved a cooperating gun dealer and real-time notice of suspect purchases, and yet multiple guns ended up in Mexico.  When the Justice Department revived the case for prosecution in 2009 to 2010, the prosecutors recognized these factors constituted gunwalking.

On the other hand, the Hernandez investigation took place in late 2007 and involved a controlled delivery, not gunwalking.  In a controlled delivery, law enforcement watches to see that their target goes through with the steps of a crime in order to see that they have the requisite intent, but then interdicts the guns afterwards.  Documents produced by the Justice Department make clear that in the Hernandez investigation, Mexican law enforcement waiting on the other side of the border failed to interdict the weapons.  The Hernandez investigation is different from Fast and Furious and apparently from Wide Receiver in that those cases involved no safeguards and the government of Mexico was never informed about them.

Documents supporting the FACTS.

 
Increasing Penalties for Counterfeit Drugs-Bipartisan, Bicameral bill introduced PDF Print E-mail
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Written by Grassley Press   
Tuesday, 22 November 2011 09:49

Leahy, Grassley, Bennet, Blumenthal, Meehan, Sánchez Propose Bipartisan, Bicameral
Bill To Increase Penalties For Counterfeit Drugs

WASHINGTON – U.S. Senators Patrick Leahy (D-Vt.), Chuck Grassley (R-Iowa), Michael Bennet (D-Co.), and Richard Blumenthal (D-Conn.) and U.S. Representatives Patrick Meehan (R-Pa.) and Linda Sánchez (D-Calif.) introduced bipartisan, bicameral legislation Thursday to increase penalties for trafficking counterfeit drugs.  The legislation responds to recommendations made by the U.S. Intellectual Property Enforcement Coordinator and the administration’s Counterfeit Pharmaceutical Inter-agency Working Group.

The Counterfeit Drug Penalty Enhancement Act will increase penalties for the trafficking of counterfeit drugs to reflect the severity of the crime and the harm to the public.  While it is currently illegal to introduce counterfeit drugs into interstate commerce, the penalties are no different than those for the trafficking of other products, such as electronics or clothing.  The Counterfeit Drug Penalty Enhancement Act will target violators that knowingly manufacture, sell or traffic counterfeit medicines to the United States.

“While the manufacture and sale of any counterfeit product is a serious crime, counterfeit medication poses a grave danger to public health that warrants a harsher punishment,” said Leahy.  “This legislation will raise those penalties to a level that meets the severity of the offense.  Deterring this epidemic problem is a bipartisan effort.”

“Counterfeit medicines are some of the most profitable commodities for criminal organizations.  Purchases of counterfeit drugs by unsuspecting customers are growing at alarming rates, especially over the internet,” Grassley said.  “These drugs present a serious threat to the health and safety of people around the world.  It’s important we address this threat by imposing harsher penalties on criminals who counterfeit these medicines.”

“Counterfeit pharmaceutical drugs are putting Coloradans at risk. In some cases the medicine you take may not be effective, in other cases it may make you ill, or worse,” Bennet said. “Right now, the penalties for producing a fake company logo on a bottle of counterfeit drugs are more severe than they are for actually making and selling a counterfeit drug. We can help prevent these drugs from reaching hospitals, pharmacies and consumers by giving law enforcement the tools they need to crack down on these crimes.”

“Counterfeit drugs threaten the health of consumers and undermine American companies,” said Blumenthal.  “This legislation will enhance the penalties for trafficking in these substances, helping us to crack down on the epidemic of illegal counterfeiting and ensure that our medicines remain safe and effective.”

“These illegal, unregulated, uninspected drugs create a false sense of security among purchasers when in fact they can be extremely dangerous,” Meehan said. “Not only are they a threat to public health and safety, but as a prosecutor, I saw the hand of sophisticated criminal enterprises behind the operations. Steeper penalties will help deter these criminals from continuing to break our laws and put people’s lives at risk.”

“As a mother, I want to know the medications my family is taking are authentic and, most importantly, safe.  The American people deserve to have peace of mind when they use medications,” said Sánchez. “Unfortunately, massive counterfeit drug enterprises continue to exploit the Internet to jeopardize the public’s safety and rob American businesses of millions of dollars in revenue.  This legislation not only holds criminals accountable, but it gives our law enforcement officers the ability to effectively go after counterfeit drug traffickers.”

It has been reported that counterfeit drugs result in 100,000 fatalities globally each year, and account for an estimated $75 billion in annual revenue for criminal enterprises.

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In Iowa’s Interest: Giving Thanks-And Giving a Hand to the Less Fortunate PDF Print E-mail
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Written by Sen. Tom Harkin   
Tuesday, 22 November 2011 09:45
by Senator Tom Harkin

As we gather this Thanksgiving to spend time with our families and to enjoy the bounty of the season, we must also remember the many Americans who struggle to put food on their tables.

It is hard to imagine any family, child or individual in a nation as fortunate as ours going without food, but sadly, that is the reality for too many in our country. According to the Iowa Food Bank Association, hunger affects one in eight Iowans. And according to Jordan Vernoy, who heads the organization, Iowans are also grappling with something he calls “hidden hunger” – those who earn enough to not qualify for federal assistance, but are still struggling to provide for their families. For them, food pantries and local aid groups are a lifeline.

But food banks and non-profit providers are struggling too, as they work to keep up with record demand stemming from some of our country’s most protracted economic struggles since the great depression. Just as many families are hard hit by joblessness and reduced wages, so too are the organizations that help these folks straining to keep up with demand, even as contributions are falling.

As the holiday season begins, this is a great time to illustrate the strength and compassion of our community by volunteering time or donating food – a simple act that can make a difference to the less fortunate. There’s an old saying: “we make a living by what we make, but we make a life by what we give.” A number of Iowa resources are available. For a list of local Community Action Agencies, please visit http://www.iowacommunityaction.com/Agency/index.cfm.

Or, if you are interested in donating food or volunteering, please visit the Iowa Food Bank Association at http://iowafba.org/.

I hope you and your family have a wonderful, safe and Happy Thanksgiving.

A PDF version of the column is available by clicking here.

 
Facts are Stubborn Things...#2 at Justice Briefed on Agent Terry Shooting PDF Print E-mail
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Written by Grassley Press   
Tuesday, 22 November 2011 09:38

Senate Judiciary Committee Oversight Hearing with Attorney General Eric Holder, Nov. 8, 2011

Details of Agent Terry Shooting Briefed to the No. 2 at Justice

Senator Grassley: “Did Mr. Grindler ever say anything to you in December or January about the connection between the ATF and the guns found at Terry’s murder scene?”

Attorney General Holder: “No, he did not, but I think it’s understandable in the sense that the information that was shared with him did not indicate that any of the tactics that we find in the flawed Operation Fast and Furious operation, were actually mentioned in the e-mail that – that you reference. So he did not share that information with me.”

FACT

The timeline itself should have raised questions about the tactics to Deputy Attorney General Grindler.  The email Mr. Grindler received on December 17, 2010, read: “[Y]ou may recall that a CBP border agent was killed on Tuesday in a firefight in Arizona involving along the Mexican border [sic].  Two of the weapons recovered from the scene (AK-47 variants) have been linked to Jaime Avila Jr., a straw firearms purchaser that ATF and USAO have been investigating since November 2009 as part of its larger Fast and Furious operation. … ATF agents, assisted by ICE, USMS, and Phoenix Police, arrested Avila on Wednesday for falsification of ATF forms” (emphasis added).

Thus, the email to Mr. Grindler made clear that this known straw purchaser had been under investigation for more than a year, and since Avila’s falsification of forms didn’t just happen on December 15, he was being arrested purely in reaction to the fact that his gun appeared at the Terry murder scene.  Jaime Avila could have been arrested for straw purchasing any time between January 2010 and Agent Terry’s death on December 15, 2010.

Additionally, information on Avila, along with other operational details of Fast and Furious, had already been presented to Mr. Grindler in a detailed March 2010 briefing.  At that time he was informed that Avila had purchased 17 weapons, as well as that three other straw buyers had already bought 670 guns by that time.  Mr. Grindler’s own notes on the presentation show that he knew ATF was following those guns to stash houses, and yet were nevertheless being recovered in Mexico, implying that ATF was not maintaining surveillance.

Documents supporting the FACTS

 
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