15 U.S.C. § 77t — Injunctions and prosecution of offenses

Page 162 TITLE 15—COMMERCE AND TRADE § 77t Executive Documents 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, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77t. Injunctions and prosecution of offenses (a) 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 per- son to file with it a statement in writing, under oath, or otherwise, as to all the facts and cir- cumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts. (b) 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 pre- scribed 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 restrain- ing 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 discre- tion, institute the necessary criminal pro- ceedings under this subchapter. Any such crimi- nal proceeding may be brought either in the dis- trict wherein the transmittal of the prospectus or security complained of begins, or in the dis- trict wherein such prospectus or security is re- ceived. (c) Writ of mandamus Upon application of the Commission, the dis- trict courts of the United States and the United States courts of any Territory shall have juris- diction 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. (d) 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 there- under, or a cease-and-desist order entered by the Commission pursuant to section 77h–1 of this title, other than by committing a viola- tion 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. (2) Amount of penalty (A) First tier The amount of the penalty shall be deter- mined 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 vio- lation, if the violation described in para- graph (1) involved fraud, deceit, manipula- tion, or deliberate or reckless disregard of a regulatory requirement. (C) Third tier Notwithstanding subparagraphs (A) and (B), the amount of penalty for each such vio- lation 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 regu- latory 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 sec- tion 7246 of this title and section 78u–6 of this title. (B) Collection of penalties If a person upon whom such a penalty is imposed shall fail to pay such penalty with- in 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 ac- tion that the Commission or the Attorney General is entitled to bring. (D) Jurisdiction and venue For purposes of section 77v of this title, ac- tions under this section 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 Page 163 TITLE 15—COMMERCE AND TRADE § 77u section 77h–1 of this title, each separate viola- tion 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. (e) Authority of court to prohibit persons from serving as officers and directors In any proceeding under subsection (b), the court may prohibit, conditionally or uncondi- tionally, and permanently or for such period of time as it shall determine, any person who vio- lated section 77q(a)(1) of this title 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 per- son’s conduct demonstrates unfitness to serve as an officer or director of any such issuer. (f) Prohibition of attorneys’ fees paid from Com- mission 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 adminis- trative action, shall not be distributed as pay- ment for attorneys’ fees or expenses incurred by private parties seeking distribution of the dis- gorged funds. (g) Authority of a court to prohibit persons from participating in an offering of penny stock (1) In general In any proceeding under subsection (a) against any person participating in, or, at the time of the alleged misconduct, who was par- ticipating in, an offering of penny stock, the court may prohibit that person from partici- pating in an offering of penny stock, condi- tionally or unconditionally, and permanently or for such period of time as the court shall determine. (2) Definition For purposes of this subsection, the term ‘‘person participating in an offering of penny stock’’ includes any person engaging in activi- ties with a broker, dealer, or issuer for pur- poses of issuing, trading, or inducing or at- tempting 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 per- sons, in whole or in part, conditionally or un- conditionally, from inclusion in such term. (May 27, 1933, ch. 38, title I, § 20, 48 Stat. 86; Pub. L. 100–181, title II, § 208, Dec. 4, 1987, 101 Stat. 1253; Pub. L. 101–429, title I, § 101, Oct. 15, 1990, 104 Stat. 932; Pub. L. 104–67, title I, § 103(b)(1), Dec. 22, 1995, 109 Stat. 756; Pub. L. 107–204, title III, §§ 305(a)(2), 308(d)(3), title VI, § 603(b), July 30, 2002, 116 Stat. 779, 785, 795; Pub. L. 111–203, title IX, § 923(a)(1), July 21, 2010, 124 Stat. 1849.) Editorial Notes AMENDMENTS 2010—Subsec. (d)(3)(A). Pub. L. 111–203 inserted ‘‘and section 78u–6 of this title’’ after ‘‘section 7246 of this title’’. 2002—Subsec. (d)(3)(A). Pub. L. 107–204, § 308(d)(3), in- serted ‘‘, except as otherwise provided in section 7246 of this title’’ before period at end. Subsec. (e). Pub. L. 107–204, § 305(a)(2), substituted ‘‘unfitness’’ for ‘‘substantial unfitness’’. Subsec. (g). Pub. L. 107–204, § 603(b), added subsec. (g). 1995—Subsec. (f). Pub. L. 104–67 added subsec. (f). 1990—Subsecs. (d), (e). Pub. L. 101–429 added subsecs. (d) and (e). 1987—Subsec. (b). Pub. L. 100–181, § 208(a), inserted first sentence and struck out former first sentence con- taining similar provisions. Subsec. (c). Pub. L. 100–181, § 208(b), amended subsec. (c) generally. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. EFFECTIVE DATE OF 1995 AMENDMENT Amendment by Pub. L. 104–67 not to affect or apply to any private action arising under this subchapter or title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), commenced before and pending on Dec. 22, 1995, see section 108 of Pub. L. 104–67, set out as a note under section 77l of this title. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–429 effective Oct. 15, 1990, with provisions relating to civil penalties and account- ing and disgorgement, see section 1(c)(1) and (2) of Pub. L. 101–429, set out in a note under section 77g of this title. CONSTRUCTION OF 1995 AMENDMENT Nothing in amendment by Pub. L. 104–67 to be deemed to create or ratify any implied right of action, or to prevent Commission, by rule or regulation, from re- stricting or otherwise regulating private actions under Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), see section 203 of Pub. L. 104–67, set out as a Construc- tion note under section 78j–1 of this title. Executive Documents 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, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77u. Hearings by Commission All hearings shall be public and may be held before the Commission or an officer or officers of the Commission designated by it, and appro- priate records thereof shall be kept. (May 27, 1933, ch. 38, title I, § 21, 48 Stat. 86.) Executive Documents 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, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.