Sens. Warren, Coburn Introduce Bill To Widen Agency Settlement Disclosures
By Rob Tricchinelli
Jan. 8 –A bipartisan pair of U.S. senators introduced a bill Jan. 8 that would require federal enforcement agencies to reveal more details about the settlements they reach when investigating corporate misconduct.
Sens. Elizabeth Warren (D-Mass.) and Tom Coburn (R-Okla.) introduced the Truth in Settlements Act of 2014, to require agencies to publicly post the terms of settlements they make with businesses and individuals, in an effort to bolster government transparency.
“Anytime an agency decides that an enforcement action is needed, but it is not willing to go to court, that agency should be willing to disclose the key terms and conditions of the agreement,” Warren said in a statement.
“Our bill gives taxpayers the transparency tools they need to access real information and numbers regarding enforcement settlements,” Coburn said in a statement.
The nine-page bill would require agencies to make specific disclosures when settling an enforcement action that requires a payment of $1 million or more.
An agency would have to post on its website the terms of a settlement deal, including each claim settled and the dollar amount each settling party must pay.
If an agency makes all or part of a settlement confidential, it would have to explain “what interests confidentiality protects” and why those interests “outweigh the public’s interest” in learning the settlement details.
Under the bill, the agencies would also have to explain whether any part of the settlement amount is tax-deductible.
Federal tax code allows companies to deduct settlement payments that are considered compensation or restitution, but not those that are fines or penalties.
“Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known because often companies are allowed to deduct part of the payment,” Coburn said.
Calls for Transparency
Both Senators sit on the Senate Banking Committee, and Warren has pressed regulators on why they have not taken Wall Street banks to trial.
In June, the SEC revised its no-admit-or-deny policy and said it would try to secure liability admissions from defendants in certain circumstances.
The bill would also require federal agencies to annually report how many settlements they made and which were fully or partially confidential, and it would require the Government Accountability Office to report on agency reasons for confidentiality and whether there are ways to reduce confidential settlements.
“Increased transparency will shut down backroom deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for strong and effective enforcement that benefits the public interest,” Warren said in the Jan. 8 statement.
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To see the bill, visit http://www.warren.senate.gov/files/documents/Truth%20In%20Settlements%20Bill.pdf.