Senators Seek More Transparency In Federal Agency Settlements

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Explore:  Settlement Transparency

On January 8, Senate Banking Committee members Elizabeth Warren (D-MA) and Tom Coburn (R-OK) released the “Truth in Settlements Act.” The legislation would mandate that for any criminal or civil settlement entered into by a federal agency that requires total payments of $1 million or more, the agency must post online in a searchable format a list of each covered settlement agreement. The list must include, among other things: (i) the total settlement amount and a description of the claims; (ii) the names of parties and the amount each settling party is required to pay; and (iii) for each settling party, the amount of the payment designated as a civil penalty or fine, or otherwise specified as not tax deductible. The bill also would require that public statements by an agency about a covered settlement describe: (i) which portion of any payments is a civil or criminal penalty or fine, or is expressly specified as non-tax deductible; and (ii) any actions the settling company is required to take under the agreement, in lieu of or in addition to any payment. The bill would exempt disclosure of information subject to a confidentiality provision, but would in cases where partial or full confidentiality is applied, require the agency to issue a public statement about why confidential treatment is required to protect the public interest of the U.S. The bill also would require public companies to describe in their annual and periodic SEC reports any claim filed for a tax deduction that relates to a payment required under a covered settlement. In announcing the legislation, Senator Warren stated that the bill is needed to “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.”