Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, July 24, 2012

Bipartisan Legislation Introduced in Senate to Increase SEC Penalties

Senator Charles Grassley (R-IA) has been a vocal critic of the SEC, but on Monday he joined forces with Senator Jack Reed (D-RI) and introduced legislation that would give the SEC something it has asked for -- an increase in the statutory limits on civil monetary penalties.  The Stronger Enforcement of Civil Penalties Act of 2012 would increase the per violation cap applicable to the most serious violations to $1 million for individuals (up from $150,000) and $10 million for entities (up from $750,000).  (In most instances, the SEC alleges multiple violations, so the total amount can be considerably more.)  In cases where the penalty is tied to the amount of illicit gains, the penalty can be tripled.  Alternatively, the losses incurred by the victims as a result of the violation could serve as the maximum amount.  In addition, the penalty can be tripled for recidivists who have been convicted of securities fraud or subject to SEC administrative relief within the past five years.

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