§ 80a-41. — Enforcement of subchapter.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC80a-41]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-41. Enforcement of subchapter
(a) Investigation
The Commission may make such investigations as it deems necessary to
determine whether any person has violated or is about to violate any
provision of this subchapter or of any rule, regulation, or order
hereunder, or to determine whether any action in any court or any
proceeding before the Commission shall be instituted under this
subchapter against a particular person or persons, or with respect to a
particular transaction or transactions. The Commission shall permit any
person to file with it a statement in writing, under oath or otherwise
as the Commission shall determine, as to all the facts and circumstances
concerning the matter to be investigated.
(b) Administration of oaths and affirmations, subpena of witnesses, etc.
For the purpose of any investigation or any other proceeding under
this subchapter, any member of the Commission, or any officer thereof
designated by it, is empowered to administer oaths and affirmations,
subpena witnesses, compel their attendance, take evidence, and require
the production of any books, papers, correspondence, memoranda,
contracts, agreements, or other records which are relevant or material
to the inquiry. Such attendance of witnesses and the production of any
such records may be required from any place in any State or in any
Territory or other place subject to the jurisdiction of the United
States at any designated place of hearing.
(c) Jurisdiction of courts of United States
In case of contumacy by, or refusal to obey a subpena issued to, any
person, the Commission may invoke the aid of any court of the United
States within the jurisdiction of which such investigation or proceeding
is carried on, or where such person resides or carries on business, in
requiring the attendance and testimony of witnesses and the production
of books, papers, correspondence, memoranda, contracts, agreements, and
other records. And such court may issue an order requiring such person
to appear before the Commission or member or officer designated by the
Commission, there to produce records, if so ordered, or to give
testimony touching the matter under investigation or in question; any
failure to obey such order of the court may be punished by such court as
a contempt thereof. All process in any such case may be served in the
judicial district whereof such person is an inhabitant or wherever he
may be found. Any person who without just cause shall fail or refuse to
attend and testify or to answer any lawful inquiry or to produce books,
papers, correspondence, memoranda, contracts, agreements, or other
records, if in his or its power so to do, in obedience to the subpena of
the Commission, shall be guilty of a misdemeanor, and upon conviction
shall be subject to a fine of not more than $1,000 or to imprisonment
for a term of not more than one year, or both.
(d) Action for injunction
Whenever it shall appear to the Commission that any person has
engaged or is about to engage in any act or practice constituting a
violation of any provision of this subchapter, or of any rule,
regulation, or order hereunder, it may in its discretion bring an action
in the proper district court of the United States, or the proper United
States court of any Territory or other place subject to the jurisdiction
of the United States, to enjoin such acts or practices and to enforce
compliance with this subchapter or any rule, regulation, or order
hereunder. Upon a showing that such person has engaged or is about to
engage in any such act or practice, a permanent or temporary injunction
or decree or restraining order shall be granted without bond. In any
proceeding under this subsection to enforce compliance with section 80a-
7 of this title, the court as a court of equity may, to the extent it
deems necessary or appropriate, take exclusive jurisdiction and
possession of the investment company or companies involved and the
books, records, and assets thereof, wherever located; and the court
shall have jurisdiction to appoint a trustee, who with the approval of
the court shall have power to dispose of any or all of such assets,
subject to such terms and conditions as the court may prescribe. The
Commission may transmit such evidence as may be available concerning any
violation of the provisions of this subchapter or of any rule,
regulation, or order thereunder, to the Attorney General, who, in his
discretion, may institute the appropriate criminal proceedings under
this subchapter.
(e) 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 80a-9(f) 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 80a-43 of this title, actions under
this paragraph 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 80a-9(f) 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
the order, each day of the failure to comply shall be deemed a
separate offense.
(Aug. 22, 1940, ch. 686, title I, Sec. 42, 54 Stat. 842; Pub. L. 91-452,
title II, Sec. 215, Oct. 15, 1970, 84 Stat. 929; Pub. L. 100-181, title
VI, Sec. 623, Dec. 4, 1987, 101 Stat. 1262; Pub. L. 101-429, title III,
Sec. 302, Oct. 15, 1990, 104 Stat. 945; Pub. L. 107-204, title III,
Sec. 308(d)(4), July 30, 2002, 116 Stat. 785.)
Amendments
2002--Subsec. (e)(3)(A). Pub. L. 107-204 inserted ``, except as
otherwise provided in section 7246 of this title'' before period at end.
1990--Subsec. (e). Pub. L. 101-429 added subsec. (e).
1987--Subsecs. (d), (e). Pub. L. 100-181 redesignated subsec. (e) as
(d).
1970--Subsec. (d). Pub. L. 91-452 struck out subsec. (d) which
related to immunity from prosecution of any individual compelled to
testify or produce evidence, documentary or otherwise, after claiming
his privilege against self-incrimination.
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), (2) of Pub. L. 101-429, set out in a note under
section 77g of this title.
Effective Date of 1970 Amendment
Amendment by Pub. L. 91-452 effective on sixtieth day following Oct.
15, 1970, see section 260 of Pub. L. 91-452, set out as an Effective
Date; Savings Provision note under section 6001 of Title 18, Crimes and
Criminal Procedure.
Savings Provision
Amendment by Pub. L. 91-452 not to affect any immunity to which any
individual is entitled under this section by reason of any testimony
given before the sixtieth day following Oct. 15, 1970, see section 260
of Pub. L. 91-452, set out as an Effective Date; Savings Provision note
under section 6001 of Title 18, Crimes and Criminal Procedure.
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 sections 78u, 80a-6, 80a-58 of this
title.
