“A bill to enhance civil penalties under the Federal securities laws, and for other purposes.”
No CRS summary available for this bill.
This section increases maximum civil money penalties for violations under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940 in both administrative proceedings and civil actions— (1) first-tier penalties to $10,000 for natural persons or $100,000 for other persons per violation or act (from $5,000/$50,000 or $7,500/$75,000); (2) second-tier penalties to $100,000/$500,000 per violation or act (from $50,000/$250,000 or $75,000/$375,000); and (3) third-tier penalties—replacing prior maximums—for violations or acts involving fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement that directly or indirectly result in substantial losses or significant risk thereof to others, or substantial pecuniary gain, to the greater of (A) $1,000,000 for a natural person or $10,000,000 for any other person, (B) three times the gross pecuniary gain to the violator, or (C) victims' losses.
This section adds a fourth tier of civil penalties—equal to three times the otherwise applicable maximum amount—to multiple SEC enforcement provisions if, within the prior five years, the violator was criminally convicted of securities fraud or subject to a Commission judgment or order alleging fraud. The provision makes this change to: (1) Securities Act of 1933, in cease-and-desist proceedings (sec. 8A(g)(2)) and injunctions/prosecutions (sec. 20(d)(2)); (2) Securities Exchange Act of 1934, in civil actions (sec. 21(d)(3)(B)) and administrative proceedings (sec. 21B(b)); (3) Investment Company Act of 1940, in underwriter ineligibility provisions (sec. 9(d)(2)) and enforcement actions (sec. 42(e)(2)); and (4) Investment Advisers Act of 1940, in cease-and-desist orders (sec. 203(i)(2)) and civil actions (sec. 209(e)(2)).
This section amends the civil penalty provisions of the Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940 in parallel ways: (1) to expand the violations subject to civil penalties to include violations of a federal court injunction or a bar, suspension, limitation, or prohibition obtained or entered by the SEC under the respective act (in addition to violations of statutory provisions, rules or regulations thereunder, or cease-and-desist orders); and (2) to specify that, for enforcement actions involving such an injunction, SEC order, or cease-and-desist order, each separate violation (or each day of continuing failure to comply) constitutes a separate offense. (Thus, these changes increase potential civil penalties for repeat or ongoing noncompliance with SEC injunctions and bars.)