CITE

    15 USC Sec. 77h-1                                           01/08/2008

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2A - SECURITIES AND TRUST INDENTURES
    SUBCHAPTER I - DOMESTIC SECURITIES

HEAD

    Sec. 77h-1. Cease-and-desist proceedings

STATUTE

    (a) Authority of Commission
      If the Commission finds, after notice and opportunity for
    hearing, that any person is violating, has violated, or is about to
    violate any provision of this subchapter, or any rule or regulation
    thereunder, the Commission may publish its findings and enter an
    order requiring such person, and any other person that is, was, or
    would be a cause of the violation, due to an act or omission the
    person knew or should have known would contribute to such
    violation, to cease and desist from committing or causing such
    violation and any future violation of the same provision, rule, or
    regulation. Such order may, in addition to requiring a person to
    cease and desist from committing or causing a violation, require
    such person to comply, or to take steps to effect compliance, with
    such provision, rule, or regulation, upon such terms and conditions
    and within such time as the Commission may specify in such order.
    Any such order may, as the Commission deems appropriate, require
    future compliance or steps to effect future compliance, either
    permanently or for such period of time as the Commission may
    specify, with such provision, rule, or regulation with respect to
    any security, any issuer, or any other person.
    (b) Hearing
      The notice instituting proceedings pursuant to subsection (a) of
    this section shall fix a hearing date not earlier than 30 days nor
    later than 60 days after service of the notice unless an earlier or
    a later date is set by the Commission with the consent of any
    respondent so served.
    (c) Temporary order
      (1) In general
        Whenever the Commission determines that the alleged violation
      or threatened violation specified in the notice instituting
      proceedings pursuant to subsection (a) of this section, or the
      continuation thereof, is likely to result in significant
      dissipation or conversion of assets, significant harm to
      investors, or substantial harm to the public interest, including,
      but not limited to, losses to the Securities Investor Protection
      Corporation, prior to the completion of the proceedings, the
      Commission may enter a temporary order requiring the respondent
      to cease and desist from the violation or threatened violation
      and to take such action to prevent the violation or threatened
      violation and to prevent dissipation or conversion of assets,
      significant harm to investors, or substantial harm to the public
      interest as the Commission deems appropriate pending completion
      of such proceeding. Such an order shall be entered only after
      notice and opportunity for a hearing, unless the Commission
      determines that notice and hearing prior to entry would be
      impracticable or contrary to the public interest. A temporary
      order shall become effective upon service upon the respondent
      and, unless set aside, limited, or suspended by the Commission or
      a court of competent jurisdiction, shall remain effective and
      enforceable pending the completion of the proceedings.
      (2) Applicability
        This subsection shall apply only to a respondent that acts, or,
      at the time of the alleged misconduct acted, as a broker, dealer,
      investment adviser, investment company, municipal securities
      dealer, government securities broker, government securities
      dealer, or transfer agent, or is, or was at the time of the
      alleged misconduct, an associated person of, or a person seeking
      to become associated with, any of the foregoing.
    (d) Review of temporary orders
      (1) Commission review
        At any time after the respondent has been served with a
      temporary cease-and-desist order pursuant to subsection (c) of
      this section, the respondent may apply to the Commission to have
      the order set aside, limited, or suspended. If the respondent has
      been served with a temporary cease-and-desist order entered
      without a prior Commission hearing, the respondent may, within 10
      days after the date on which the order was served, request a
      hearing on such application and the Commission shall hold a
      hearing and render a decision on such application at the earliest
      possible time.
      (2) Judicial review
        Within -
          (A) 10 days after the date the respondent was served with a
        temporary cease-and-desist order entered with a prior
        Commission hearing, or
          (B) 10 days after the Commission renders a decision on an
        application and hearing under paragraph (1), with respect to
        any temporary cease-and-desist order entered without a prior
        Commission hearing,
      the respondent may apply to the United States district court for
      the district in which the respondent resides or has its principal
      place of business, or for the District of Columbia, for an order
      setting aside, limiting, or suspending the effectiveness or
      enforcement of the order, and the court shall have jurisdiction
      to enter such an order. A respondent served with a temporary
      cease-and-desist order entered without a prior Commission hearing
      may not apply to the court except after hearing and decision by
      the Commission on the respondent's application under paragraph
      (1) of this subsection.
      (3) No automatic stay of temporary order
        The commencement of proceedings under paragraph (2) of this
      subsection shall not, unless specifically ordered by the court,
      operate as a stay of the Commission's order.
      (4) Exclusive review
        Section 77i(a) of this title shall not apply to a temporary
      order entered pursuant to this section.
    (e) Authority to enter order requiring accounting and disgorgement
      In any cease-and-desist proceeding under subsection (a) of this
    section, the Commission 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) Authority of the Commission to prohibit persons from serving as
      officers or directors
      In any cease-and-desist proceeding under subsection (a) of this
    section, the Commission may issue an order to prohibit,
    conditionally or unconditionally, and permanently or for such
    period of time as it shall determine, any person who has violated
    section 77q(a)(1) of this title or the rules or regulations
    thereunder, from acting as an officer or director of any issuer
    that has a class of securities registered pursuant to section 78l
    of this title, or that is required to file reports pursuant to
    section 78o(d) of this title, if the conduct of that person
    demonstrates unfitness to serve as an officer or director of any
    such issuer.

SOURCE

    (May 27, 1933, ch. 38, title I, Sec. 8A, as added Pub. L. 101-429,
    title I, Sec. 102, Oct. 15, 1990, 104 Stat. 933; amended Pub. L.
    107-204, title XI, Sec. 1105(b), July 30, 2002, 116 Stat. 809.)

AMENDMENTS

      2002 - Subsec. (f). Pub. L. 107-204 added subsec. (f).
                              EFFECTIVE DATE
      Section effective Oct. 15, 1990, with provisions relating to
    civil penalties and accounting and disgorgement, see section
    1(c)(1) and (2) of Pub. L. 101-429, set out in an Effective Date of
    1990 Amendment note under section 77g of this title.