§ 77t. — Injunctions and prosecution of offenses.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC77t]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2A--SECURITIES AND TRUST INDENTURES
SUBCHAPTER I--DOMESTIC SECURITIES
Sec. 77t. Injunctions and prosecution of offenses
(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.
(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.
Section Referred to in Other Sections
This section is referred to in section 77uuu of this title.
