Notice2023-00370
Adjustments to Civil Monetary Penalty Amounts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 11, 2023
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission (the "Commission") is publishing this notice (the "Notice") pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the "2015 Act"). This Act requires all agencies to annually adjust for inflation the civil monetary penalties that can be imposed under the statutes administered by the agency and publish the adjusted amounts in the Federal Register. This Notice sets forth the annual inflation adjustment of the maximum amount of civil monetary penalties ("CMPs") administered by the Commission under the Securities Act of 1933, the Securities Exchange Act of 1934 (the "Exchange Act"), the Investment Company Act of 1940, the Investment Advisers Act of 1940, and certain penalties under the Sarbanes-Oxley Act of 2002. These amounts are effective beginning on January 15, 2023, and will apply to all penalties imposed after that date for violations of the aforementioned statutes that occurred after November 2, 2015.
Full Text
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<title>Federal Register, Volume 88 Issue 7 (Wednesday, January 11, 2023)</title>
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[Federal Register Volume 88, Number 7 (Wednesday, January 11, 2023)]
[Notices]
[Pages 1614-1616]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-00370]
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-11143; 34-96605; IA-6212; IC-34797]
Adjustments to Civil Monetary Penalty Amounts
AGENCY: Securities and Exchange Commission.
ACTION: Notice of annual inflation adjustment of civil monetary
penalties.
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SUMMARY: The Securities and Exchange Commission (the ``Commission'') is
publishing this notice (the ``Notice'') pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015 (the ``2015
Act''). This Act requires all agencies to annually adjust for inflation
the civil monetary penalties that can be imposed under the statutes
administered by the agency and publish the adjusted amounts in the
Federal Register. This Notice sets forth the annual inflation
adjustment of the maximum amount of civil monetary penalties (``CMPs'')
administered by the Commission under the Securities Act of 1933, the
Securities Exchange Act of 1934 (the ``Exchange Act''), the Investment
Company Act of 1940, the Investment Advisers Act of 1940, and certain
penalties under the Sarbanes-Oxley Act of 2002. These amounts are
effective beginning on January 15, 2023, and will apply to all
penalties imposed after that date for violations of the aforementioned
statutes that occurred after November 2, 2015.
FOR FURTHER INFORMATION CONTACT: Stephen M. Ng, Senior Special Counsel,
Office of the General Counsel, at (202) 551-7957, or Hannah W. Riedel,
Senior Counsel, Office of the General Counsel, at (202) 551-7918.
SUPPLEMENTARY INFORMATION:
I. Background
This Notice is being published pursuant to the 2015 Act,\1\ which
amended the Federal Civil Penalties Inflation Adjustment Act of 1990
(the ``Inflation Adjustment Act'').\2\ The Inflation Adjustment Act
previously had been amended by the Debt Collection Improvement Act of
1996 (the ``DCIA'') \3\ to require that each federal agency adopt
regulations at least once every four years that adjust for inflation
the CMPs that can be imposed under the statutes administered by the
agency. Pursuant to this requirement, the Commission previously adopted
regulations in 1996, 2001, 2005, 2009, and 2013 to adjust the maximum
amount of the CMPs that could be imposed under the statutes the
Commission administers.\4\
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\1\ Public Law 114-74 Sec. 701, 129 Stat. 599-601 (Nov. 2,
2015), codified at 28 U.S.C. 2461 note.
\2\ Public Law 101-410, 104 Stat. 890-892 (1990), codified at 28
U.S.C. 2461 note.
\3\ Public Law 104-134, Title III, section 31001(s)(1), 110
Stat. 1321-373 (1996), codified at 28 U.S.C. 2461 note.
\4\ See Release Nos. 33-7361, 34-37912, IA-1596, IC-22310, dated
November 1, 1996 (61 FR 57773 (Nov. 8, 1996)) (effective December 9,
1996), previously found at 17 CFR 201.1001 and table I to subpart E
of part 201; Release Nos. 33-7946, 34-43897, IA-1921, IC-24846,
dated January 31, 2001 (66 FR 8761 (Feb. 2, 2001)) (effective
February 2, 2001), previously found at 17 CFR 201.1002 and table II
to subpart E of part 201; Release Nos. 33-8530, 34-51136, IA-2348,
IC-26748, dated February 9, 2005 (70 FR 7606 (Feb. 14, 2005))
(effective February 14, 2005), previously found at 17 CFR 201.1003
and table III to subpart E of part 201; Release Nos. 33-9009, 34-
59449, IA-2845, IC-28635, dated February 25, 2009 (74 FR 9159 (Mar.
3, 2009)) (effective March 3, 2009), previously found at 17 CFR
201.1004 and table IV to subpart E of part 201; and Release Nos. 33-
9387, 34-68994, IA-3557, IC-30408, dated February 27, 2013 (78 FR
14179 (Mar. 5, 2013)) (effective March 5, 2013), previously found at
17 CFR 201.1005 and table V to subpart E of part 201. The penalty
amounts contained in these releases have now been consolidated into
table I to 17 CFR 201.1001.
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The 2015 Act replaces the inflation adjustment formula prescribed
in the DCIA with a new formula for calculating the inflation-adjusted
amount of CMPs. The 2015 Act requires that agencies use this new
formula to re-calculate the inflation-adjusted amounts of the penalties
they administer on an annual basis and publish these new amounts in the
Federal Register by January 15 of each year.\5\ The Commission
previously published the first annual adjustment required by the 2015
Act on January 6, 2017 (the ``2017 Adjustment'').\6\ As part of the
2017 Adjustment, the Commission promulgated 17 CFR 201.1001(a) and
table I to 17 CFR 201.1001, which lists the penalty amounts for all
violations that occurred on or before November 2, 2015. For violations
occurring after November 2, 2015, Sec. 201.1001(b) provides that the
applicable penalty amounts will be adjusted annually based on the
formula set forth in the 2015 Act. Section 201.1001(b) further provides
that these adjusted amounts will be published in the Federal Register
and on the Commission's website. The Commission published the two most
recent annual adjustments on January 8, 2021 (``2021 Adjustment'') \7\
and January 6, 2022 (``2022 Adjustment'').\8\
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\5\ 28 U.S.C. 2461 note sec. 4.
\6\ Release Nos. 33-10276; 34-79749; IA-4599; IC-32414 (82 FR
5367 (Jan. 18, 2017)) (effective Jan. 18, 2017).
\7\ Release Nos. 33-10918; 34-90874; IA-5664; IC-34166 (86 FR
2716 (Jan. 13, 2021)) (effective Jan. 15, 2021).
\8\ Release Nos. 33-11021; 34-93925; IA-5938; IC-34466 (87 FR
1808 (Jan. 12, 2022)) (effective Jan. 15, 2022).
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A CMP is defined in relevant part as any penalty, fine, or other
sanction that:
[[Page 1615]]
(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 a Federal court pursuant to Federal
law.\9\ This definition applies to the monetary penalty provisions
contained in four statutes administered by the Commission: the
Securities Act, the Exchange Act, the Investment Company Act, and the
Investment Advisers Act. In addition, the Sarbanes-Oxley Act provides
the Public Company Accounting Oversight Board (the ``PCAOB'') authority
to levy civil monetary penalties in its disciplinary proceedings
pursuant to 15 U.S.C. 7215(c)(4)(D).\10\ The definition of a CMP in the
Inflation Adjustment Act encompasses such civil monetary penalties.\11\
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\9\ 28 U.S.C. 2461 note sec. 3(2).
\10\ 15 U.S.C. 7215(c)(4)(D).
\11\ The Commission may by order affirm, modify, remand, or set
aside sanctions, including civil monetary penalties, imposed by the
PCAOB. See section 107(c) of the Sarbanes-Oxley Act of 2002, 15
U.S.C. 7217. The Commission may enforce such orders in federal
district court pursuant to section 21(e) of the Exchange Act. As a
result, penalties assessed by the PCAOB in its disciplinary
proceedings are penalties ``enforced'' by the Commission for
purposes of the Inflation Adjustment Act. See Adjustments to Civil
Monetary Penalty Amounts, Release No. 33-8530 (Feb. 4, 2005) [70 FR
7606 (Feb. 14, 2005)].
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II. Adjusting the Commission's Penalty Amounts for Inflation
This Notice sets forth the annual inflation adjustment required by
the 2015 Act for all CMPs under the Securities Act, the Exchange Act,
the Investment Company Act, and the Investment Advisers Act, and
certain civil monetary penalties under the Sarbanes-Oxley Act.
Pursuant to the 2015 Act, the penalty amounts in the 2023
Adjustment are adjusted for inflation by increasing them by the
percentage change between the Consumer Price Index for all Urban
Consumers (``CPI-U'') for October 2021 and the October 2022 CPI-U.\12\
The Office of Management and Budget (``OMB'') has provided its
calculation of this multiplier (the ``CPI-U Multiplier'') to
agencies.\13\ The new penalty amounts are determined by multiplying the
amounts in the 2022 Adjustment by the CPI-U Multiplier and then
rounding to the nearest dollar.
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\12\ 28 U.S.C. 2461 note Sec. 5.
\13\ Office of Management and Budget, Implementation of Penalty
Inflation Adjustments for 2023, Pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015
(December 15, 2022), available at <a href="https://www.whitehouse.gov/wp-content/uploads/2022/12/M-23-05-CMP-CMP-Guidance.pdf">https://www.whitehouse.gov/wp-content/uploads/2022/12/M-23-05-CMP-CMP-Guidance.pdf</a>. This
multiplier represents the percentage increase between the October
2021 CPI-U and the October 2022 CPI-U, plus 1.
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For example, the CMP for certain insider trading violations by
controlling persons under Exchange Act Section 21A(a)(3) \14\ was
readjusted for inflation as part of the 2022 Adjustment to $2,301,065.
To determine the new CMP under this provision, the Commission
multiplies this amount by the CPI-U Multiplier of 1.07745, and rounds
to the nearest dollar. Thus, the new CMP for Exchange Act section
21A(a)(3) is $2,479,282.
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\14\ 15 U.S.C. 78u-1(a)(3).
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Below is the Commission's calculation of the new penalty amounts
for the penalties it administers:
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2022 2023
Civil monetary penalty Adjustment CPI-U Adjusted
U.S. Code citation description penalty multiplier penalty
amounts amounts
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15 U.S.C. 77h-1(g) (Securities Act sec. For natural person........... $9,484 1.07745 $10,219
8A(g)). For any other person......... 94,847 1.07745 102,193
For natural person/fraud..... 94,847 1.07745 102,193
For any other person/fraud... 474,233 1.07745 510,962
For natural person/fraud/ 189,693 1.07745 204,385
substantial losses or risk
of losses to others or gains
to self.
For any other person/fraud/ 916,850 1.07745 987,860
substantial losses or risk
of losses to others or gain
to self.
15 U.S.C. 77t(d) (Securities Act sec. For natural person........... 10,360 1.07745 11,162
20(d)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others.
15 U.S.C. 78u(d)(3) (Exchange Act sec. For natural person........... 10,360 1.07745 11,162
21(d)(3)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others or gains
to self.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others or gain
to self.
15 U.S.C. 78u-1(a)(3) (Exchange Act sec. Insider Trading--controlling 2,301,065 1.07745 2,479,282
21A(a)(3)). person.
15 U.S.C. 78u-2 (Exchange Act sec. 21B)... For natural person........... 10,360 1.07745 11,162
For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others.
15 U.S.C. 78ff(b) (Exchange Act sec. Exchange Act/failure to file 612 1.07745 659
32(b)). information documents,
reports.
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15 U.S.C. 78ff(c)(1)(B) (Exchange Act sec. Foreign Corrupt Practices-- 23,011 1.07745 24,793
32(c)(1)(B)). any issuer.
15 U.S.C. 78ff(c)(2)(B) (Exchange Act sec. Foreign Corrupt Practices-- 23,011 1.07745 24,793
32(c)(2)(B)). any agent or stockholder
acting on behalf of issuer.
15 U.S.C. 80a-9(d) (Investment Company Act For natural person........... 10,360 1.07745 11,162
sec. 9(d)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others or gains
to self.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others or gain
to self.
15 U.S.C. 80a-41(e) (Investment Company For natural person........... 10,360 1.07745 11,162
Act sec. 42(e)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others.
15 U.S.C. 80b-3(i) (Investment Advisers For natural person........... 10,360 1.07745 11,162
Act sec. 203(i)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others or gains
to self.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others or gain
to self.
15 U.S.C. 80b-9(e) (Investment Advisers For natural person........... 10,360 1.07745 11,162
Act sec. 209(e)). For any other person......... 103,591 1.07745 111,614
For natural person/fraud..... 103,591 1.07745 111,614
For any other person/fraud... 517,955 1.07745 558,071
For natural person/fraud/ 207,183 1.07745 223,229
substantial losses or risk
of losses to others.
For any other person/fraud/ 1,035,909 1.07745 1,116,140
substantial losses or risk
of losses to others.
15 U.S.C. 7215(c)(4)(D)(i) (Sarbanes-Oxley For natural person........... 152,557 1.07745 164,373
Act sec. 105(c)(4)(D)(i)). For any other person......... 3,051,164 1.07745 3,287,477
15 U.S.C. 7215(c)(4)(D)(ii) (Sarbanes- For natural person........... 1,144,186 1.07745 1,232,803
Oxley Act sec. 105(c)(4)(D)(ii)). For any other person......... 22,883,723 1.07745 24,656,067
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Pursuant to the 2015 Act and 17 CFR 201.1001, the adjusted penalty
amounts in this Notice (and all penalty adjustments performed pursuant
to the 2015 Act) apply to penalties imposed after the date the
adjustment is effective for violations that occurred after November 2,
2015, the 2015 Act's enactment date. These penalty amounts supersede
the amounts in the 2022 Adjustment.\15\ For violations that occurred on
or before November 2, 2015, the penalty amounts in table I to 17 CFR
201.1001 continue to apply.\16\
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\15\ The penalty amounts in this Notice are being published in
the Federal Register and will not be added to the Code of Federal
Regulations in accordance with the 2015 Act and 17 CFR 201.1001(b).
See 28 U.S.C. 2461 note sec. 4(a)(2); 17 CFR 201.1001(b). In
addition to being published in the Federal Register, the penalty
amounts in this Notice will be made available on the Commission's
website at <a href="https://www.sec.gov/enforce/civil-penalties-inflation-adjustments.htm">https://www.sec.gov/enforce/civil-penalties-inflation-adjustments.htm</a>, as detailed in 17 CFR 201.1001(b). This website
also lists the penalty amounts for violations that occurred on or
before November 2, 2015.
\16\ 17 CFR 201.1001(a).
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III. Small Business Regulatory Enforcement Fairness Act Status
OMB has concurred in our recommendation that this Notice is not a
``major rule'' as defined by section 251 of the Small Business
Regulatory Enforcement Fairness Act (``SBREFA''), 5 U.S.C. 804(2),
because (1) it will not have an annual effect of $100 million dollars
or more on the economy, (2) it does not present a major increase in
prices for consumers or individual industries, and (3) it does not have
significant adverse effects on competition, investment, or
innovation.\17\
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\17\ See generally SBREFA, Public Law 104-121 (1996).
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By the Commission.
Dated: January 6, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023-00370 Filed 1-10-23; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on January 11, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.