§ 78u-2. — Civil remedies in administrative proceedings.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78u-2]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78u-2. Civil remedies in administrative proceedings
(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, 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.
(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.)
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
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.
Section Referred to in Other Sections
This section is referred to in sections 78j-1, 78o-4 of this title.
