Antifraud network legislation OK'd by committee

WASHINGTON-The House Financial Services Committee passed H.R. 1408, the Financial Services Antifraud Network Act, introduced by freshman Congressman Mike Rogers (R-Mich.). The legislation aims at creating an antifraud network between the nation’s more than 250 financial regulators to share information in hopes of better preventing financial fraud schemes. The bill gives financial regulators, including NCUA and all the state credit union regulators, six months to develop a plan for the data network and two years to implement it. The bill was inspired by the Martin Frankel case, in which Frankel was barred from the securities industry for fraud before he switched over to the insurance industry, where he stole hundreds of millions of dollars. “As a former special agent of the Federal Bureau of Investigation (FBI), I know firsthand that criminals come in all shapes and sizes,” Rogers said in a statement after the passage of the bill. “Advances in modern technology and the Internet have created a new frontier for criminals, allowing them to defraud consumers with a mere click of a computer mouse. Our regulators need the same technological tools.” Regulators had already begun agreements among themselves but, according to House Financial Services Committee Chairman Mike Oxley (R-Ohio), also a former FBI agent, could not create a seamless network and address privacy concerns. Oxley called the bill “quick and inexpensive.” Under the bill, deciding what information to share and the frequency of sharing would be in the hands of the regulators. The legislation would only direct regulators to share public final disciplinary and formal enforcement actions taken against financial companies and professionals. Further, the legislation promotes further sharing of publicly available information, including data from financial reports, affiliations, and applications that are factual and substantiated. A statement from the Financial Services Committee stressed that the legislation does not require any new information collecting, require regulators to create a new database, and no consumer information will be collected or shared in any way.