[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Rules and Regulations]
[Pages 57773-57775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28596]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 201
[Release Nos. 33-7361; 34-37912; IC-22310; IA-1596]
Adjustments to Civil Monetary Penalty Amounts
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: This rule implements the Debt Collection Improvement Act of
1996, which requires that the Commission adopt a regulation adjusting
for inflation the maximum amount of civil monetary penalties under the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940 and the Investment Advisers Act of 1940.
EFFECTIVE DATE: December 9, 1996.
FOR FURTHER INFORMATION CONTACT: Richard A. Levine, Senior Special
Counsel, or Laura Leedy Gansler, Senior Counsel, Office of the General
Counsel, at (202) 942-0900.
SUPPLEMENTARY INFORMATION: This regulation implements the Debt
Collection Improvement Act of 1996 (``DCIA'').1 The DCIA amended
the Federal Civil Penalties Inflation Adjustment Act (``FCPIAA'')
2 to require that the Commission adopt regulations no later than
180 days after the enactment of the statute and at least once every
four years thereafter adjusting for inflation the maximum amount of the
civil monetary penalties under the statutes administered by the
Commission.
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\1\ P.L. 104-134, section 31001(s) (April 26, 1996)
\2\ 28 U.S.C. 2461 (1990).
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A civil monetary penalty is defined in relevant part as any
penalty, fine, or other sanction that: (1) is for a specific amount, or
has a maximum amount, as provided by federal law; and (2) is assessed
or enforced by an agency in an administrative proceeding or by federal
court pursuant to federal law.3 This definition covers the
monetary penalty provisions contained in the statutes administered by
the Commission.
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\3\ Id. at Sec. 3(2).
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The DCIA requires that the penalties be adjusted by the cost-of-
living adjustment set forth in section 5 of the FCPIAA.4 The cost-
of-living adjustment is defined as the percentage by which the U.S.
Department of Labor's Consumer Price Index (``CPI'') for the month of
June of the year preceding the adjustment exceeds the CPI for the
[[Page 57774]]
month of June for the year in which the amount of the penalty was last
set or adjusted pursuant to law. The adjusted amounts are then rounded
in accordance with the rounding formula set forth in section 5 of the
FCPIAA. However, the DCIA imposes a 10% maximum increase for each
penalty for the first adjustment pursuant thereto.
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\4\ P.L. 104-134.
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The Commission administers four statutes which provide for civil
monetary penalties: the Securities Act of 1933; the Securities Exchange
Act of 1934; the Investment Company Act of 1940; and the Investment
Advisers Act of 1940. The last years in which the penalties
administered by the Commission were adjusted or set were 1936,5
1988,6 and 1990.7 For each of these years, the required CPI
adjustment exceeds 10%. Therefore, for this first increase pursuant to
the DCIA, the Commission is directed by the statute to increase the
maximum amount of each penalty by 10%.
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\5\ See 15 U.S.C. 78ff(b)). The CPI for June 1936 was 41.4. The
CPI for June 1995 was 456.7. Therefore, the cost-of-living
adjustment factor for penalties set or last amended in 1936 is
11.031.
\6\ See 15 U.S.C. 78ff(c)(1)(B), 78ffc(2)(C), 78u-1(a)(3). The
CPI for June 1988 was 353.5. The CPI for June 1995 was 456.7.
Therefore, the cost-of-living adjustment factor for penalties set or
last amended in 1988 is 1.29.
\7\ See 15 U.S.C. 77t(d); 15 U.S.C. 78u-2, 78u(d)(3); 15 USC
80a-9(d), 80a-41(e), 80b-3(i), 80b-9(e). The CPI for June 1990 was
389.1. The CPI for June 1995 was 456.7. Therefore, the cost-of-
living adjustment factor for penalties set or last amended in 1990
is 1.17.
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Accordingly, the Commission is adopting an amendment to 17 CFR 201
to add a new Subpart E increasing by 10% the amount of each civil
monetary penalty authorized by Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. The adjustments set forth in the
amendment apply to violations occurring after the effective date of the
amendment.
Because the Commission is required by statute to adjust the civil
monetary penalties within its jurisdiction by 10%, the Commission finds
that good cause exists to dispense with public notice and comment
pursuant to the notice and comment provisions of the Administrative
Procedure Act (``APA'').8 Specifically, the Commission finds that,
because the adjustment is mandated by Congress and does not involve the
exercise of Commission discretion or any policy judgments, public
notice and comment is unnecessary. Therefore, the provisions of the
Regulatory Flexibility Act, which apply only when notice and comments
are required by the APA or other laws, are also not applicable.9
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\8\ 5 U.S.C. 553(b)(3)(B).
\9\ See 5 U.S.C. 601-612.
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This rule does not contain any collection of information
requirements as defined by the Paperwork Reduction Act of 1995 as
amended.10 Therefore, Office of Management and Budget review is
not required.
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\10\ 44 U.S.C. 3501 et. seq.
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List of Subjects in 17 CFR Part 201
Administrative practice and procedure, Claims, Confidential
business information, Equal access to justice, Lawyers, Securities.
For the reasons set forth in the preamble, part 201, title 17,
chapter II of the Code of Federal Regulations is amended to read as
follows:
PART 201--RULES OF PRACTICE
Subpart E--Adjustment of Civil Monetary Penalties
Sec.
201.1001 Adjustment of civil monetary penalties.
Table I to Subpart E--Civil Monetary Penalty Inflation Adjustments
Subpart E--Adjustment of Civil Monetary Penalties
Authority: Pub. L. 104-134, 110 Stat. 1321.
Sec. 201.1001 Adjustment of civil monetary penalties.
As required by the Debt Collection Improvement Act of 1996, the
maximum amounts of all civil monetary penalties under the Securities
Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940, and the Investment Advisers Act of 1940 are
adjusted for inflation in accordance with Table I to this subpart. The
adjustments set forth in Table I apply to violations occurring after
December 9, 1996.
Table 1 To Subpart E.--Civil Monetary Penalty Inflation Adjustments
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Year
penalty Original Adjusted
U.S. code citation Civil monetary penalty amount was statutory maximum
description last set by maximum penalty amount
law penalty amount
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SECURITIES AND EXCHANGE
COMMISSION:
15 USC 77t(d)............... FOR NATURAL PERSON............... 1990 $5,000 $5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
15 USC 78ff(b).............. EXCHANGE ACT/FAILURE TO FILE 1936 100 110
INFORMATION DOCUMENTS, REPORTS.
15 USC 78ff(c)(1)(B)........ FOREIGN CORRUPT PRACTICES--ANY 1988 10,000 11,000
ISSUER.
15 USC 78ff(c)(2)(C)........ FOREIGN CORRUPT PRACTICES--ANY 1988 10,000 11,000
AGENT OR STOCKHOLDER ACTING ON
BEHALF OF ISSUER.
15 USC 78u-1(a)(3).......... INSIDER TRADING--CONTROLLING 1988 1,000,000 1,100,000
PERSONS.
15 USC 78u-2................ FOR NATURAL PERSON............... 1990 5,000 5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
[[Page 57775]]
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES TO OTHERS/GAINS TO SELF.
FOR ANY OTHER PERSONS/SUBSTANTIAL 1990 500,000 550,000
LOSSES TO OTHERS/GAIN TO SELF.
15 USC 78u(d)(3)............ FOR NATURAL PERSON............... 1990 5,000 5,000
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
15 USC 80a-9(d)............. FOR NATURAL PERSON............... 1990 5,000 5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES TO OTHERS/GAINS TO SELF.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES TO OTHER/GAINS TO SELF.
15 USC 80a-41(e)............ FOR NATURAL PERSON............... 1990 5,000 5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
15 USC 80b-3(i)............. FOR NATURAL PERSON............... 1990 5,000 5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES TO OTHERS/GAIN TO SELF.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES TO OTHERS/GAIN TO SELF.
15 USC 80b-9(e)............. FOR NATURAL PERSON............... 1990 5,000 5,500
FOR ANY OTHER PERSON............. 1990 50,000 55,000
FOR NATURAL PERSON/FRAUD......... 1990 50,000 55,000
FOR ANY OTHER PERSON/FRAUD....... 1990 250,000 275,000
FOR NATURAL PERSON/SUBSTANTIAL 1990 100,000 110,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
FOR ANY OTHER PERSON/SUBSTANTIAL 1990 500,000 550,000
LOSSES OR RISK OF LOSSES TO
OTHERS.
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Dated: November 1, 1996.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28596 Filed 11-7-96; 8:45 am]
BILLING CODE 8010-01-M
