The U.S. House of Representatives, following the lead of the Senate overwhelmingly approved, by a 391-28 vote, new penalties for corporate fraud in an effort to boost investor confidence.
When the Republican-led House first passed a corporate reform bill in April, it did not include penalties for executives who defraud investors.
But in the wake of a series of accounting scandals and a steadily-declining stock market, lawmakers approved a measure that Republicans say is even tougher than the bill passed by the Democrat-led Senate Monday.
For example, the House measure would establish criminal penalties for executives who retaliate against employees who report corporate abuse, while the Senate version offers only civil penalties.
"It provides twice the penalties than the bill that was passed by the other body," said Congressman James Sensenbrenner, a Wisconsin Republican and chairman of the Judiciary Committee. "It provides criminal sanctions against those who retaliate against whistleblowers."
But Democrats say the House measure does not go far enough. "It does not require these companies to preserve all their auditing records for five years," said Congressman Ed Markey of Massachusetts. "It does not extend from three years out to five years the period upon which people can sue if they have been defrauded."
Democrats accused Republicans of dropping their opposition to penalties for corporate fraud because the issue promises to be a key one in the run-up to congressional elections in November. Democrats also accused Republican leaders of forcing the legislation through the House without the opportunity to add amendments.
The House and Senate bills will have to be reconciled before a final version is sent to President Bush for his signature. Mr. Bush called on lawmakers to send him the legislation before they adjourn for their August recess.