90 FR 7 pgs. 2767-2770 - Adjustments to Civil Monetary Penalty Amounts
Type: NOTICEVolume: 90Number: 7Pages: 2767 - 2770
Pages: 2767, 2768, 2769, 2770Docket number: [Release Nos. 33-11350; 34-102134; IA-6808; IC-35442]
FR document: [FR Doc. 2025-00513 Filed 1-10-25; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-11350; 34-102134; IA-6808; IC-35442]
Adjustments to Civil Monetary Penalty Amounts
AGENCY:
Securities and Exchange Commission.
ACTION:
Notice of annual inflation adjustment of civil monetary penalties.
SUMMARY:
[top] The Securities and Exchange Commission ("Commission") is publishing this notice ("Notice") pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 ("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
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 ("Inflation Adjustment Act"). 2 The Inflation Adjustment Act previously had been amended by the Debt Collection Improvement Act of 1996 ("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
Footnotes:
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, §?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 Nov. 1, 1996 (effective Dec. 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 Jan. 31, 2001 (effective Feb. 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 Feb. 9, 2005 (effective Feb. 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 Feb. 25, 2009 (effective Mar. 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 Feb. 27, 2013 (effective Mar. 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.
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 ("2017 Adjustment"). 6 As part of the 2017 Adjustment, the Commission promulgated 17 CFR 201.1001(a) and Table I to Subsection 1001, which lists the penalty amounts for all violations that occurred on or before November 2, 2015. For violations occurring after November 2, 2015, Subsection 1001(b) provides that the applicable penalty amounts will be adjusted annually based on the formula set forth in the 2015 Act. Subsection 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 most recent annual adjustment on January 5, 2024 ("2024 Adjustment"). 7
Footnotes:
5 ?28 U.S.C. 2461 note Sec. 4.
6 ?Release Nos. 33-10276; 34-79749; IA-4599; IC-32414 (effective Jan. 18, 2017).
7 ?Release Nos. 33-11263; 34-99276; IA-6521; IC-35085) (effective Jan. 15, 2024).
A CMP 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 a federal court pursuant to federal law. 8 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 ("PCAOB") authority to levy civil monetary penalties in its disciplinary proceedings pursuant to 15 U.S.C. 7215(c)(4)(D). 9 The definition of a CMP in the Inflation Adjustment Act encompasses such civil monetary penalties. 10
Footnotes:
8 ?28 U.S.C. 2461 note Sec. 3(2).
9 ?15 U.S.C. 7215(c)(4)(D).
10 ?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)].
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 2025 Adjustment are adjusted for inflation by increasing them by a multiplier ("CPI-U Multiplier") that represents the percentage change between the Consumer Price Index for all Urban Consumers ("CPI-U") for October 2023 and the October 2024 CPI-U. 11 The CPI-U Multiplier for the 2025 Adjustment is 1.02598. 12 The new penalty amounts are determined by multiplying the amounts in the 2024 Adjustment by the CPI-U Multiplier and then rounding to the nearest dollar.
Footnotes:
11 ?28 U.S.C. 2461 note Sec. 5.
12 ?This figure is based on the percentage change between published CPI-U figures for Oct. 2024 (315.664) and Oct. 2023 (307.671), dividing the former by the latter (1.02597905). OMB rounds the multiplier to the nearest hundredth thousandth (1.02598). See Office of Management and Budget, Implementation of Penalty Inflation Adjustments for 2025, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 17, 2024), available at available at https://www.whitehouse.gov/wp-content/uploads/2024/12/M-25-02.pdf.
For example, the CMP for certain insider trading violations by controlling persons under Exchange Act Section 21A(a)(3)? 13 was readjusted for inflation as part of the 2024 Adjustment to $2,559,636. To determine the new CMP under this provision, the Commission multiplies this amount by the CPI-U Multiplier of 1.02598, and rounds to the nearest dollar. Thus, the new CMP for Exchange Act Section 21A(a)(3) is $2,636,135.
Footnotes:
13 ?15 U.S.C. 78u-1(a)(3).
[top] Below is the Commission's calculation of the new penalty amounts for the penalties it administers:
| U.S. code citation | Civil monetary penalty description | 2024 Adjustment penalty amounts | CPI-U multiplier | 2025 Adjusted penalty amounts |
|---|---|---|---|---|
| 15 U.S.C. 77h-1(g) (Securities Act Sec. 8A(g)) | For natural person For any other person For natural person/fraud For any other person/fraud | $10,550 105,505 105,505 527,522 | 1.02598 1.02598 1.02598 1.02598 | $10,824 108,246 108,246 541,227 |
| For natural person/fraud/substantial losses or risk of losses to others or gains to self | 211,009 | 1.02598 | 216.491 | |
| For any other person/fraud/substantial losses or risk of losses to others or gain to self | 1,019,877 | 1.02598 | 1,046,373 | |
| 15 U.S.C. 77t(d) (Securities Act Sec. 20(d)) | For natural person | 11,524 | 1.02598 | 11,823 |
| For any other person For natural person/fraud For any other person/fraud | 115,231 115,231 576,158 | 1.02598 1.02598 1.02598 | 118,225 118,225 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 78u(d)(3) (Exchange Act Sec. 21(d)(3)) | For natural person For any other person For natural person/fraud | 11,524 115,231 115,231 | 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 |
| For any other person/fraud | 576,158 | 1.02598 | 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others or gains to self | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others or gain to self | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 78u-1(a)(3) (Exchange Act Sec. 21A(a)(3)) | Insider Trading-controlling person | 2,559,636 | 1.02598 | 2,626,135 |
| 15 U.S.C. 78u-2 (Exchange Act Sec. 21B) | For natural person For any other person For natural person/fraud | 11,524 115,231 115,231 | 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 |
| For any other person/fraud | 576,158 | 1.02598 | 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 78ff(b) (Exchange Act Sec. 32(b)) | Exchange Act/failure to file information documents, reports | 680 | 1.02598 | 698 |
| 15 U.S.C. 78ff(c)(1)(B) (Exchange Act Sec. 32(c)(1)(B)) | Foreign Corrupt Practices-any issuer | 25,597 | 1.02598 | 26,262 |
| 15 U.S.C. 78ff(c)(2)(B) (Exchange Act Sec. 32(c)(2)(B)) | Foreign Corrupt Practices-any agent or stockholder acting on behalf of issuer | 25,597 | 1.02598 | 26,262 |
| 15 U.S.C. 80a-9(d) (Investment Company Act Sec. 9(d)) | For natural person For any other person For natural person/fraud For any other person/fraud | 11,524 115,231 115,231 576,158 | 1.02598 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 591,127 |
| For natural person/fraud/substantial losses or risk of losses to others or gains to self | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others or gain to self | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 80a-41(e) (Investment Company Act Sec. 42(e)) | For natural person For any other person For natural person/fraud | 11,524 115,231 115,231 | 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 |
| For any other person/fraud | 576,158 | 1.02598 | 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 80b-3(i) (Investment Advisers Act Sec. 203(i)) | For natural person For any other person For natural person/fraud | 11,524 115,231 115,231 | 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 |
| For any other person/fraud | 576,158 | 1.02598 | 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others or gains to self | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others or gain to self | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 80b-9(e) (Investment Advisers Act Sec. 209(e)) | For natural person For any other person For natural person/fraud | 11,524 115,231 115,231 | 1.02598 1.02598 1.02598 | 11,823 118,225 118,225 |
| For any other person/fraud | 576,158 | 1.02598 | 591,127 | |
| For natural person/fraud/substantial losses or risk of losses to others | 230,464 | 1.02598 | 236,451 | |
| For any other person/fraud/substantial losses or risk of losses to others | 1,152,314 | 1.02598 | 1,182,251 | |
| 15 U.S.C. 7215(c)(4)(D)(i) (Sarbanes-Oxley Act Sec. 105(c)(4)(D)(i)) | For natural person For any other person | 169,700 3,394,024 | 1.02598 1.02598 | 174,109 3,482,201 |
| 15 U.S.C. 7215(c)(4)(D)(ii) (Sarbanes-Oxley Act Sec. 105(c)(4)(D)(ii)) | For natural person For any other person | 1,272,758 25,455,170 | 1.02598 1.02598 | 1,305,824 26,116,495 |
[top] 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
Footnotes:
14 ?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 https://www.sec.gov/enforce/civil-penalties-inflation-adjustments.htm, as detailed in 17 CFR 201.1001(b). This website also lists the penalty amounts for violations that occurred on or before Nov. 2, 2015.
15 ?17 CFR 201.1001(a).
III. Small Business Regulatory Enforcement Fairness Act Status
The Office of Management and Budget ("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. 16
Footnotes:
16 ? See generally SBREFA, Public Law 104-121 (1996).
By the Commission.
Dated: January 7, 2025.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-00513 Filed 1-10-25; 8:45 am]
BILLING CODE 8011-01-P