CITE

    15 USC Sec. 77t                                             01/08/2008

EXPCITE

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

HEAD

    Sec. 77t. Injunctions and prosecution of offenses

STATUTE

    (a) Investigation of violations
      Whenever it shall appear to the Commission, either upon complaint
    or otherwise, that the provisions of this subchapter, or of any
    rule or regulation prescribed under authority thereof, have been or
    are about to be violated, it may, in its discretion, either require
    or permit such person to file with it a statement in writing, under
    oath, or otherwise, as to all the facts and circumstances
    concerning the subject matter which it believes to be in the public
    interest to investigate, and may investigate such facts.
    (b) Action for injunction or criminal prosecution in district court
      Whenever it shall appear to the Commission that any person is
    engaged or about to engage in any acts or practices which
    constitute or will constitute a violation of the provisions of this
    subchapter, or of any rule or regulation prescribed under authority
    thereof, the Commission may, in its discretion, bring an action in
    any district court of the United States, or United States court of
    any Territory, to enjoin such acts or practices, and upon a proper
    showing, a permanent or temporary injunction or restraining order
    shall be granted without bond. The Commission may transmit such
    evidence as may be available concerning such acts or practices to
    the Attorney General who may, in his discretion, institute the
    necessary criminal proceedings under this subchapter. Any such
    criminal proceeding may be brought either in the district wherein
    the transmittal of the prospectus or security complained of begins,
    or in the district wherein such prospectus or security is received.
    (c) Writ of mandamus
      Upon application of the Commission, the district courts of the
    United States and the United States courts of any Territory shall
    have jurisdiction to issue writs of mandamus commanding any person
    to comply with the provisions of this subchapter or any order of
    the Commission made in pursuance thereof.
    (d) Money penalties in civil actions
      (1) Authority of Commission
        Whenever it shall appear to the Commission that any person has
      violated any provision of this subchapter, the rules or
      regulations thereunder, or a cease-and-desist order entered by
      the Commission pursuant to section 77h-1 of this title, other
      than by committing a violation subject to a penalty pursuant to
      section 78u-1 of this title, the Commission may bring an action
      in a United States district court to seek, and the court shall
      have jurisdiction to impose, upon a proper showing, a civil
      penalty to be paid by the person who committed such violation.
      (2) Amount of penalty
        (A) First tier
          The amount of the penalty shall be determined by the court in
        light of the facts and circumstances. For each violation, the
        amount of the penalty shall not exceed the greater of (i)
        $5,000 for a natural person or $50,000 for any other person, or
        (ii) the gross amount of pecuniary gain to such defendant as a
        result of the violation.
        (B) Second tier
          Notwithstanding subparagraph (A), the amount of penalty for
        each such violation shall not exceed the greater of (i) $50,000
        for a natural person or $250,000 for any other person, or (ii)
        the gross amount of pecuniary gain to such defendant as a
        result of the violation, if the violation described in
        paragraph (1) involved fraud, deceit, manipulation, or
        deliberate or reckless disregard of a regulatory requirement.
        (C) Third tier
          Notwithstanding subparagraphs (A) and (B), the amount of
        penalty for each such violation shall not exceed the greater of
        (i) $100,000 for a natural person or $500,000 for any other
        person, or (ii) the gross amount of pecuniary gain to such
        defendant as a result of the violation, if -
            (I) the violation described in paragraph (1) involved
          fraud, deceit, manipulation, or deliberate or reckless
          disregard of a regulatory requirement; and
            (II) such violation directly or indirectly resulted in
          substantial losses or created a significant risk of
          substantial losses to other persons.
      (3) Procedures for collection
        (A) Payment of penalty to Treasury
          A penalty imposed under this section shall be payable into
        the Treasury of the United States, except as otherwise provided
        in section 7246 of this title.
        (B) Collection of penalties
          If a person upon whom such a penalty is imposed shall fail to
        pay such penalty within the time prescribed in the court's
        order, the Commission may refer the matter to the Attorney
        General who shall recover such penalty by action in the
        appropriate United States district court.
        (C) Remedy not exclusive
          The actions authorized by this subsection may be brought in
        addition to any other action that the Commission or the
        Attorney General is entitled to bring.
        (D) Jurisdiction and venue
          For purposes of section 77v of this title, actions under this
        section shall be actions to enforce a liability or a duty
        created by this subchapter.
      (4) Special provisions relating to a violation of a cease-and-
        desist order
        In an action to enforce a cease-and-desist order entered by the
      Commission pursuant to section 77h-1 of this title, each separate
      violation of such order shall be a separate offense, except that
      in the case of a violation through a continuing failure to comply
      with such an order, each day of the failure to comply with the
      order shall be deemed a separate offense.
    (e) Authority of court to prohibit persons from serving as officers
      and directors
      In any proceeding under subsection (b) of this section, the court
    may prohibit, conditionally or unconditionally, and permanently or
    for such period of time as it shall determine, any person who
    violated section 77q(a)(1) of this title 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 person's
    conduct demonstrates unfitness to serve as an officer or director
    of any such issuer.
    (f) Prohibition of attorneys' fees paid from Commission
      disgorgement funds
      Except as otherwise ordered by the court upon motion by the
    Commission, or, in the case of an administrative action, as
    otherwise ordered by the Commission, funds disgorged as the result
    of an action brought by the Commission in Federal court, or as a
    result of any Commission administrative action, shall not be
    distributed as payment for attorneys' fees or expenses incurred by
    private parties seeking distribution of the disgorged funds.
    (g) Authority of a court to prohibit persons from participating in
      an offering of penny stock
      (1) In general
        In any proceeding under subsection (a) of this section against
      any person participating in, or, at the time of the alleged
      misconduct, who was participating in, an offering of penny stock,
      the court may prohibit that person from participating in an
      offering of penny stock, conditionally or unconditionally, and
      permanently or for such period of time as the court shall
      determine.
      (2) Definition
        For purposes of this subsection, the term "person participating
      in an offering of penny stock" includes any person engaging in
      activities with a broker, dealer, or issuer for purposes of
      issuing, trading, or inducing or attempting to induce the
      purchase or sale of, any penny stock. The Commission may, by rule
      or regulation, define such term to include other activities, and
      may, by rule, regulation, or order, exempt any person or class of
      persons, in whole or in part, conditionally or unconditionally,
      from inclusion in such term.

SOURCE

    (May 27, 1933, ch. 38, title I, Sec. 20, 48 Stat. 86; Pub. L. 100-
    181, title II, Sec. 208, Dec. 4, 1987, 101 Stat. 1253; Pub. L. 101-
    429, title I, Sec. 101, Oct. 15, 1990, 104 Stat. 932; Pub. L. 104-
    67, title I, Sec. 103(b)(1), Dec. 22, 1995, 109 Stat. 756; Pub. L.
    107-204, title III, Secs. 305(a)(2), 308(d)(3), title VI, Sec.
    603(b), July 30, 2002, 116 Stat. 779, 785, 795.)

AMENDMENTS

      2002 - Subsec. (d)(3)(A). Pub. L. 107-204, Sec. 308(d)(3),
    inserted ", except as otherwise provided in section 7246 of this
    title" before period at end.
      Subsec. (e). Pub. L. 107-204, Sec. 305(a)(2), substituted
    "unfitness" for "substantial unfitness".
      Subsec. (g). Pub. L. 107-204, Sec. 603(b), added subsec. (g).
      1995 - Subsec. (f). Pub. L. 104-67 added subsec. (f).
      1990 - Subsecs. (d), (e). Pub. L. 101-429 added subsecs. (d) and
    (e).
      1987 - Subsec. (b). Pub. L. 100-181, Sec. 208(a), inserted first
    sentence and struck out former first sentence containing similar
    provisions.
      Subsec. (c). Pub. L. 100-181, Sec. 208(b), amended subsec. (c)
    generally.
                     EFFECTIVE DATE OF 1995 AMENDMENT
      Amendment by Pub. L. 104-67 not to affect or apply to any private
    action arising under this subchapter or title I of the Securities
    Exchange Act of 1934 (15 U.S.C. 78a et seq.), commenced before and
    pending on Dec. 22, 1995, see section 108 of Pub. L. 104-67, set
    out as a note under section 77l of this title.
                     EFFECTIVE DATE OF 1990 AMENDMENT
      Amendment by Pub. L. 101-429 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 a note under section 77g of this title.
                      CONSTRUCTION OF 1995 AMENDMENT
      Nothing in amendment by Pub. L. 104-67 to be deemed to create or
    ratify any implied right of action, or to prevent Commission, by
    rule or regulation, from restricting or otherwise regulating
    private actions under Securities Exchange Act of 1934 (15 U.S.C.
    78a et seq.), see section 203 of Pub. L. 104-67, set out as a
    Construction note under section 78j-1 of this title.

TRANSFER OF FUNCTIONS

      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.