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.
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.
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.
Money penalties in civil actions
Authority of Commission
section 77h–1 of this titlesection 78u–1 of this titleWhenever 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 , other than by committing a violation subject to a penalty pursuant to , 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.
Amount of penalty
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.
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.
Third tier
Procedures for collection
Payment of penalty to Treasury
section 7246 of this titlesection 78u–6 of this titleA penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in and .
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.
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.
Jurisdiction and venue
section 77v of this titleFor purposes of , actions under this section shall be actions to enforce a liability or a duty created by this subchapter.
Special provisions relating to a violation of a cease-and-desist order
section 77h–1 of this titleIn an action to enforce a cease-and-desist order entered by the Commission pursuant to , 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.
Authority of court to prohibit persons from serving as officers and directors
section 77q(a)(1) of this titleloIn any proceeding under subsection (b), the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 78 of this title or that is required to file reports pursuant to section 78(d) of this title if the person’s conduct demonstrates unfitness to serve as an officer or director of any such issuer.
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.
Authority of a court to prohibit persons from participating in an offering of penny stock
In general
In any proceeding under subsection (a) 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.
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. 3848 Stat. 86Pub. L. 100–181, title II, § 208101 Stat. 1253Pub. L. 101–429, title I, § 101104 Stat. 932Pub. L. 104–67, title I, § 103(b)(1)109 Stat. 756Pub. L. 107–204, title III116 Stat. 779Pub. L. 111–203, title IX, § 923(a)(1)124 Stat. 1849(, title I, § 20, ; , , ; , , ; , , ; , §§ 305(a)(2), 308(d)(3), title VI, § 603(b), , , 785, 795; , , .)
Editorial Notes
Amendments
Pub. L. 111–203section 78u–6 of this titlesection 7246 of this title2010—Subsec. (d)(3)(A). inserted “and ” after “”.
Pub. L. 107–204, § 308(d)(3)section 7246 of this title2002—Subsec. (d)(3)(A). , inserted “, except as otherwise provided in ” before period at end.
Pub. L. 107–204, § 305(a)(2)Subsec. (e). , substituted “unfitness” for “substantial unfitness”.
Pub. L. 107–204, § 603(b)Subsec. (g). , added subsec. (g).
Pub. L. 104–671995—Subsec. (f). added subsec. (f).
Pub. L. 101–4291990—Subsecs. (d), (e). added subsecs. (d) and (e).
Pub. L. 100–181, § 208(a)1987—Subsec. (b). , inserted first sentence and struck out former first sentence containing similar provisions.
Pub. L. 100–181, § 208(b)Subsec. (c). , amended subsec. (c) generally.
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Pub. L. 111–203section 4 of Pub. L. 111–203section 5301 of Title 12Amendment by effective 1 day after , except as otherwise provided, see , set out as an Effective Date note under , Banks and Banking.
Effective Date of 1995 Amendment
Pub. L. 104–6715 U.S.C. 78asection 108 of Pub. L. 104–67lAmendment by not to affect or apply to any private action arising under this subchapter or title I of the Securities Exchange Act of 1934 ( et seq.), commenced before and pending on , see , set out as a note under section 77 of this title.
Effective Date of 1990 Amendment
Pub. L. 101–429Pub. L. 101–429section 77g of this titleAmendment by effective , with provisions relating to civil penalties and accounting and disgorgement, see section 1(c)(1) and (2) of , set out in a note under .
Construction of 1995 Amendment
Pub. L. 104–6715 U.S.C. 78asection 203 of Pub. L. 104–67section 78j–1 of this titleNothing in amendment by 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 ( et seq.), see , set out as a Construction note under .
Executive Documents
Transfer of Functions
64 Stat. 1265section 78d of this titleFor transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. , 15 F.R. 3175, , set out under .