Turn back the clock to 2002.

Congress had just enacted the Sarbanes-Oxley Act, which created the "Fair Funds" concept through which penalties and disgorgements in SEC cases can be returned directly to injured investors.

Over the next three years, the SEC disbursed funds recovered under the Fair Funds program to investors in only a handful of cases.

From 2005 to the present, the pace quickened, with the SEC returning more than $1.7 billion to injured investors, in cases such as WorldCom, Bristol-Myers Squibb, and the New York Stock Exchange Specialists litigation.

But last week, SEC Chairman Christopher Cox indicated that the floodgates are about to open, and none to soon.

According to the Securities Class Action Services Settlement Pipeline, which measures the sum of all pending or tentatively announced settlements for which the claim deadline has not passed, there is nearly $6 billion in pending SEC settlements, including more than $3.4 billion collected to compensate investors victimized by mutual-fund trading scandals.

Chairman Cox's remarks, delivered before the Senate Subcommittee on Financial Services as part of his testimony concerning the SEC's 2008 appropriations request, indicated that he has:

ordered the creation of a new office that will focus the efforts of all of the SEC's offices around the country, and work full-time to return these funds to wronged investors. The creation of this specialized function within the SEC will ensure that investors' money is returned as quickly as possible, while minimizing the costs of the distributions.

The goal of this new office will be to:

develop consistent practices, and to routinize the execution of the Fair Funds function. Too much money is still undisbursed because of the complexities of the process, leaving investors uncompensated.

Chairman Cox also indicated that the SEC would begin working with the Bureau of the Public Debt to invest Fair Funds money in interest-bearing accounts prior to distribution.

His prepared remarks can be downloaded here and you can watch the full hearing here.

Update: Best In Class has a post on the SEC's announcement, here.