CITE

    15 USC Sec. 78u-2                                           01/08/2008

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

HEAD

    Sec. 78u-2. Civil remedies in administrative proceedings

STATUTE

    (a) Commission authority to assess money penalties
      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 person -
        (1) 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;
        (2) has willfully aided, abetted, counseled, commanded,
      induced, or procured such a violation by any other person;
        (3) 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
        (4) 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;
    and that such penalty is in the public interest.
    (b) Maximum amount of penalty
      (1) First tier
        The maximum amount of penalty for each act or omission
      described in subsection (a) of this section 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) of this section 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) of this
        section 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.

SOURCE

    (June 6, 1934, ch. 404, title I, Sec. 21B, as added Pub. L. 101-
    429, title II, Sec. 202(a), Oct. 15, 1990, 104 Stat. 937; amended
    Pub. L. 107-204, title V, Sec. 501(b), July 30, 2002, 116 Stat.
    793; Pub. L. 109-291, Sec. 4(b)(1)(B), Sept. 29, 2006, 120 Stat.
    1337.)

REFERENCES IN TEXT

      The Securities Act of 1933, referred to in subsec. (a)(1), is act
    May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which is
    classified generally to subchapter I (Sec. 77a et seq.) of chapter
    2A of this title. For complete classification of this Act to the
    Code, see section 77a of this title and Tables.
      The Investment Company Act of 1940, referred to in subsec.
    (a)(1), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as
    amended, which is classified generally to subchapter I (Sec. 80a-1
    et seq.) of chapter 2D of this title. For complete classification
    of this Act to the Code, see section 80a-51 of this title and
    Tables.
      The Investment Advisers Act of 1940, referred to in subsec.
    (a)(1), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847, as
    amended, which is classified generally to subchapter II (Sec. 80b-1
    et seq.) of chapter 2D of this title. For complete classification
    of this Act to the Code, see section 80b-20 of this title and
    Tables.
      This chapter, referred to in subsec. (a)(1), (3), was in the
    original "this title". See References in Text note set out under
    section 78a of this title.

AMENDMENTS

      2006 - Subsec. (a). Pub. L. 109-291 inserted "78o-7," after "78o-
    5," in introductory provisions.
      2002 - Subsec. (a). Pub. L. 107-204 inserted "78o-6," before "78o-
    4," in introductory provisions.
                              EFFECTIVE DATE
      Section effective Oct. 15, 1990, with provisions relating to
    civil penalties and accounting and disgorgement, see section
    1(c)(1), (2) of Pub. L. 101-429, set out in an Effective Date of
    1990 Amendment note under section 77g of this title.