Penalties for breaking securities laws would increase almost tenfold under bipartisan legislation introduced in the Senate on Thursday.
The bill would allow the Securities and Exchange Commission to
levy fines of up to $1 million per offense by individuals and $10 million for each violation by firms for the most serious offenses, which would include fraud, deceit, manipulation and deliberate disregard for regulations.
The ceilings represent a substantial increase from the current limits of $160,000 for individuals and $775,000 for firms that the SEC must follow in some cases.
The caps would triple for perpetrators who have committed other violations within the last five years.
The measure would allow the SEC to assess the fines in cases brought in federal court as well as those heard by SEC administrative judges. Under current law, the SEC can assign penalties equal to the amount of investor harm, but only when the case is taken to court.
The authors of the bill, Sen. Charles Grassley, R-Iowa, and Sen. Jack Reed, D-R.I., want to give the SEC enough leeway with penalties to make an impression on violators.
“If a fine is just decimal dust for a Wall Street firm, that's not a deterrent,” Mr. Grassley, chairman of the Senate Judiciary Committee, said in a statement. “It's just the cost of doing business. A penalty should mean something, and it should get the recidivists' attention.”
Mr. Reed said the legislation would help protect the more than half of U.S. households that depend on securities investments to finance retirement and education.
“They shouldn't have to suffer undue risk or incur losses while securities-law violators get away with a slap on the wrist,” said Mr. Reed, a senior member of the Senate Banking Committee. “This bill give the SEC more tools to demand meaningful accountability from Wall Street.”
