Authority and discretion of Commission to investigate violations
The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated, is violating, or is about to violate any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated, or, as to any act or practice, or omission to act, while associated with a member, formerly associated with a member, the rules of a registered clearing agency in which such person is a participant, or, as to any act or practice, or omission to act, while a participant, was a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm, a person associated with such a firm, or, as to any act, practice, or omission to act, while associated with such firm, a person formerly associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, and may require or 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. The Commission is authorized in its discretion, to publish information concerning any such violations, and to investigate any facts, conditions, practices, or matters which it may deem necessary or proper to aid in the enforcement of such provisions, in the prescribing of rules and regulations under this chapter, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this chapter relates.
On request from a foreign securities authority, the Commission may provide assistance in accordance with this paragraph if the requesting authority states that the requesting authority is conducting an investigation which it deems necessary to determine whether any person has violated, is violating, or is about to violate any laws or rules relating to securities matters that the requesting authority administers or enforces. The Commission may, in its discretion, conduct such investigation as the Commission deems necessary to collect information and evidence pertinent to the request for assistance. Such assistance may be provided without regard to whether the facts stated in the request would also constitute a violation of the laws of the United States. In deciding whether to provide such assistance, the Commission shall consider whether (A) the requesting authority has agreed to provide reciprocal assistance in securities matters to the Commission; and (B) compliance with the request would prejudice the public interest of the United States.
Judicial enforcement of investigative power of Commission; refusal to obey subpena; criminal sanctions
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, 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; and 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 shall, without just cause, fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, and other records, if in his 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.
Injunction proceedings; authority of court to prohibit persons from serving as officers and directors; money penalties in civil actions
Whenever it shall appear to the Commission that any person is engaged or is about to engage in acts or practices constituting a violation of any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated with a member, the rules of a registered clearing agency in which such person is a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm or a person associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, it may in its discretion bring an action in the proper district court of the United States, the United States District Court for the District of Columbia, or the United States courts of any territory or other place subject to the jurisdiction of the United States, 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 as may constitute a violation of any provision of this chapter or the rules or regulations thereunder to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this chapter.
Authority of Court To Prohibit Persons From Serving as Officers and Directors.—
In any proceeding under paragraph (1) of this subsection, the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 78j(b) of this title
or the rules or regulations thereunder 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.
Money Penalties in Civil Actions.—
Authority of commission.—
Whenever it shall appear to the Commission that any person has violated any provision of this chapter, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 78u–3 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.
Amount of penalty.—
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.
Notwithstanding clause (i), 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 subparagraph (A) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
Notwithstanding clauses (i) and (ii), 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—
the violation described in subparagraph (A) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
such violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.
Procedures for collection.—
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 paragraph may be brought in addition to any other action that the Commission or the Attorney General is entitled to bring.
Jurisdiction and venue.—
For purposes of section 78aa of this title
, actions under this paragraph shall be actions to enforce a liability or a duty created by this chapter.
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 78u–3 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.
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.
In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors.
Authority of a court to prohibit persons from participating in an offering of penny stock.—
In any proceeding under paragraph (1) 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.
For purposes of this paragraph, 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.
[June 6, 1934, ch. 404], title I, § 21, [48 Stat. 899]; [May 27, 1936, ch. 462, § 7], [49 Stat. 1379]; [Pub. L. 91–452, title II, § 212], Oct. 15, 1970, [84 Stat. 929]; [Pub. L. 94–29, § 17], June 4, 1975, [89 Stat. 154]; [Pub. L. 96–433], §§ 3, 4, Oct. 10, 1980, [94 Stat. 1855], 1858; [Pub. L. 98–376, § 2], Aug. 10, 1984, [98 Stat. 1264]; [Pub. L. 100–181, title III, § 323], Dec. 4, 1987, [101 Stat. 1259]; [Pub. L. 100–704], §§ 3(a)(1), 6(b), Nov. 19, 1988, [102 Stat. 4677], 4681; [Pub. L. 101–429, title II, § 201], Oct. 15, 1990, [104 Stat. 935]; [Pub. L. 101–650, title III, § 321], Dec. 1, 1990, [104 Stat. 5117]; [Pub. L. 104–67, title I, § 103(b)(2)], Dec. 22, 1995, [109 Stat. 756]; [Pub. L. 106–554, § 1(a)(5) [title II, § 205(a)(5)]], Dec. 21, 2000, [114 Stat. 2763], 2763A–426; [Pub. L. 107–204, § 3(b)(2)], title III, §§ 305(a)(1), (b), 308(d)(1), title VI, § 603(a), July 30, 2002, [116 Stat. 749], 778, 779, 785, 794; [Pub. L. 111–203, title IX], §§ 923(b)(1), 929F(c), (d), (g)(2), 986(a)(3), July 21, 2010, [124 Stat. 1849], 1854, 1855, 1935; [Pub. L. 114–113, div. O, title VII, § 708], Dec. 18, 2015, [129 Stat. 3030].)