15 U.S.C. § 78u–2 — Civil remedies in administrative proceedings

(a) Commission authority to assess money penalties (1) In a proceeding brought under specific sections of this chapter (78o(b)(4), 78o(b)(6), 78o–6, 78o–4, 78o–5, 78o–7, or 78q–1), the SEC can impose a civil penalty on a person if, after notice and a hearing, it finds on the record that the penalty is in the public interest and that the person: (A) willfully violated the Securities Act of 1933, the Investment Company Act of 1940, the Investment Advisers Act of 1940, this chapter, their rules, or MSRB rules; (B) willfully helped, encouraged, or caused someone else to commit such a violation; (C) willfully made a false or misleading statement — or left out a required material fact — in an SEC application, report, or registration proceeding; or (D) failed to reasonably supervise, as described in section 78o(b)(4)(E), someone under their supervision who committed such a violation. (2) In a cease-and-desist proceeding under section 78u–3, the SEC can impose a civil penalty if it finds, after notice and a hearing, that the person (A) is violating or has violated this chapter or its rules, or (B) caused such a violation. (b) Maximum amount of penalty (1) First tier. The maximum penalty for each act or omission is $5,000 for an individual or $50,000 for anyone else. (2) Second tier. If the act or omission involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement, the maximum rises to $50,000 for an individual or $250,000 for anyone else. (3) Third tier. If the act or omission involved that same fraud/deceit/manipulation/reckless disregard, and it also directly or indirectly caused substantial losses (or a significant risk of them) to others, or resulted in substantial financial gain to the violator, the maximum rises to $100,000 for an individual or $500,000 for anyone else. (c) Determination of public interest In deciding whether a penalty is in the public interest, the SEC can consider: (1) whether fraud, deceit, manipulation, or reckless disregard of a regulatory requirement was involved; (2) the harm the conduct caused others, directly or indirectly; (3) how much the person was unjustly enriched, taking into account any restitution they already made; (4) whether the person has previously been found to have violated federal or state securities laws or SRO rules, been enjoined from violating them, or been convicted of violating them or of a related felony or misdemeanor described in section 78o(b)(4)(B); (5) the need to deter this person and others from similar conduct; and (6) any other matters justice may require. (d) Evidence concerning ability to pay In a proceeding where the SEC may impose a penalty, the person facing the penalty can present evidence about their ability to pay it. The SEC may, at its discretion, weigh that evidence in deciding whether the penalty is in the public interest — looking at things like the person's ability to keep operating, whether the penalty is realistically collectible, and other claims against the person's assets. (e) Authority to enter order requiring accounting and disgorgement In one of these proceedings, the SEC can order the person to provide an accounting and to disgorge ill-gotten gains, with reasonable interest. The SEC can adopt rules about how disgorged money is handled — payments to investors, interest rates, accrual periods, and similar matters. (f) Security-based swaps (1) A clearing agency that knowingly or recklessly evades, or helps or facilitates evading, the requirements of section 78c–3 is liable for a civil penalty of twice the amount normally available for a section 78c–3 violation. (2) A security-based swap dealer or major security-based swap participant that does the same faces the same doubled penalty.