(a) Commission authority to assess money penalties
(1) In general
In any proceeding instituted pursuant to sections 78o(b)(4), 78o(b)(6), 78o-6, 78o-4, 78o-5, 78o-7, or 78q-1 of this title against any person, the Commission or the appropriate regulatory agency may impose a civil penalty if it finds, on the record after notice and opportunity for hearing, that such penalty is in the public interest and that such person–
Terms Used In 15 USC 78u-2
- appropriate regulatory agency: means --
(A) When used with respect to a municipal securities dealer:
(i) the Comptroller of the Currency, in the case of a national bank, a subsidiary or a department or division of any such bank, a Federal savings association (as defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U. See 20 USC 1070d-35
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Board: means the Board of Governors of the Federal Reserve System. See 20 USC 1070d-35
- clearing agency: means any person who acts as an intermediary in making payments or deliveries or both in connection with transactions in securities or who provides facilities for comparison of data respecting the terms of settlement of securities transactions, to reduce the number of settlements of securities transactions, or for the allocation of securities settlement responsibilities. See 20 USC 1070d-35
- Commission: means the Securities and Exchange Commission established by section 78d of this title. See 20 USC 1070d-35
- dealer: means any person engaged in the business of buying and selling securities (not including security-based swaps, other than security-based swaps with or for persons that are not eligible contract participants) for such person's own account through a broker or otherwise. See 20 USC 1070d-35
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Felony: A crime carrying a penalty of more than a year in prison.
- Fraud: Intentional deception resulting in injury to another.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- major security-based swap participant: means any person--
(i) who is not a security-based swap dealer. See 20 USC 1070d-35
- Misdemeanor: Usually a petty offense, a less serious crime than a felony, punishable by less than a year of confinement.
- municipal securities: means securities which are direct obligations of, or obligations guaranteed as to principal or interest by, a State or any political subdivision thereof, or any agency or instrumentality of a State or any political subdivision thereof, or any municipal corporate instrumentality of one or more States, or any security which is an industrial development bond (as defined in section 103(c)(2) 1 of title 26) the interest on which is excludable from gross income under section 103(a)(1) 1 of title 26 if, by reason of the application of paragraph (4) or (6) of section 103(c) 1 of title 26 (determined as if paragraphs (4)(A), (5), and (7) were not included in such section 103(c)),1 paragraph (1) of such section 103(c) 1 does not apply to such security. See 20 USC 1070d-35
- person: means a natural person, company, government, or political subdivision, agency, or instrumentality of a government. See 20 USC 1070d-35
- Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
- rules of a self-regulatory organization: means the rules of an exchange which is a national securities exchange, the rules of an association of brokers and dealers which is a registered securities association, the rules of a clearing agency which is a registered clearing agency, or the rules of the Municipal Securities Rulemaking Board. See 20 USC 1070d-35
- securities laws: means the Securities Act of 1933 (15 U. See 20 USC 1070d-35
- security-based swap: includes any agreement, contract, or transaction that is as described in subparagraph (A) and also is based on the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence (other than an event described in subparagraph (A)(ii)(III)). See 20 USC 1070d-35
- security-based swap dealer: means any person who--
(i) holds themself out as a dealer in security-based swaps. See 20 USC 1070d-35
- self-regulatory organization: means any national securities exchange, registered securities association, or registered clearing agency, or (solely for purposes of sections 78s(b), 78s(c), and 78w(b) 1 of this title) the Municipal Securities Rulemaking Board established by section 78o-4 of this title. See 20 USC 1070d-35
- State: means any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, or any other possession of the United States. See 20 USC 1070d-35
(A) has willfully violated any provision of the Securities Act of 1933 [15 U.S.C. 77a et seq.], the Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.], or this chapter, or the rules or regulations thereunder, or the rules of the Municipal Securities Rulemaking Board;
(B) has willfully aided, abetted, counseled, commanded, induced, or procured such a violation by any other person;
(C) has willfully made or caused to be made in any application for registration or report required to be filed with the Commission or with any other appropriate regulatory agency under this chapter, or in any proceeding before the Commission with respect to registration, any statement which was, at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which is required to be stated therein; or
(D) has failed reasonably to supervise, within the meaning of section 78o(b)(4)(E) of this title, with a view to preventing violations of the provisions of such statutes, rules and regulations, another person who commits such a violation, if such other person is subject to his supervision; 1
(2) Cease-and-desist proceedings
In any proceeding instituted under section 78u-3 of this title against any person, the Commission may impose a civil penalty, if the Commission finds, on the record after notice and opportunity for hearing, that such person–
(A) is violating or has violated any provision of this chapter, or any rule or regulation issued under this chapter; or
(B) is or was a cause of the violation of any provision of this chapter, or any rule or regulation issued under this chapter.
(b) Maximum amount of penalty
(1) First tier
The maximum amount of penalty for each act or omission described in subsection (a) shall be $5,000 for a natural person or $50,000 for any other person.
(2) Second tier
Notwithstanding paragraph (1), the maximum amount of penalty for each such act or omission shall be $50,000 for a natural person or $250,000 for any other person if the act or omission described in subsection (a) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
(3) Third tier
Notwithstanding paragraphs (1) and (2), the maximum amount of penalty for each such act or omission shall be $100,000 for a natural person or $500,000 for any other person if–
(A) the act or omission described in subsection (a) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
(B) such act or omission directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons or resulted in substantial pecuniary gain to the person who committed the act or omission.
(c) Determination of public interest
In considering under this section whether a penalty is in the public interest, the Commission or the appropriate regulatory agency may consider–
(1) whether the act or omission for which such penalty is assessed involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;
(2) the harm to other persons resulting either directly or indirectly from such act or omission;
(3) the extent to which any person was unjustly enriched, taking into account any restitution made to persons injured by such behavior;
(4) whether such person previously has been found by the Commission, another appropriate regulatory agency, or a self-regulatory organization to have violated the Federal securities laws, State securities laws, or the rules of a self-regulatory organization, has been enjoined by a court of competent jurisdiction from violations of such laws or rules, or has been convicted by a court of competent jurisdiction of violations of such laws or of any felony or misdemeanor described in section 78o(b)(4)(B) of this title;
(5) the need to deter such person and other persons from committing such acts or omissions; and
(6) such other matters as justice may require.
(d) Evidence concerning ability to pay
In any proceeding in which the Commission or the appropriate regulatory agency may impose a penalty under this section, a respondent may present evidence of the respondent’s ability to pay such penalty. The Commission or the appropriate regulatory agency may, in its discretion, consider such evidence in determining whether such penalty is in the public interest. Such evidence may relate to the extent of such person’s ability to continue in business and the collectability of a penalty, taking into account any other claims of the United States or third parties upon such person’s assets and the amount of such person’s assets.
(e) Authority to enter order requiring accounting and disgorgement
In any proceeding in which the Commission or the appropriate regulatory agency may impose a penalty under this section, the Commission or the appropriate regulatory agency may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.
(f) Security-based swaps
(1) Clearing agency
Any clearing agency that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 78c-3 of this title shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 78c-3 of this title.
(2) Security-based swap dealer or major security-based swap participant
Any security-based swap dealer or major security-based swap participant that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 78c-3 of this title shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 78c-3 of this title.