81 FR 43042 - Adjustments to Civil Monetary Penalty Amounts
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 127 (July 1, 2016)
Federal Register Volume 81, Issue 127 (July 1, 2016)
| Page Range | 43042-43047 | |
| FR Document | 2016-15541 |
[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)] [Rules and Regulations] [Pages 43042-43047] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15541] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 201 [Release Nos. 33-10104; 34-78156; IA-4437; IC-32162; File No. S7-11-16] RIN 3235-AL94 Adjustments to Civil Monetary Penalty Amounts AGENCY: Securities and Exchange Commission. ACTION: Interim final rule; request for comment. ----------------------------------------------------------------------- SUMMARY: The Securities and Exchange Commission (the ``Commission'') is adopting an interim final rule to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which amended the Federal Civil Penalties Inflation Adjustment Act of 1990, as previously amended by the Debt Collection Improvement Act of 1996. This interim final rule adjusts 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, the Investment Advisers Act of 1940, and certain penalties under the Sarbanes-Oxley Act of 2002. DATES: Effective Date: This interim final rule is effective on August 1, 2016. Comment Date: Comments on the interim final rule should be received on or before August 15, 2016. ADDRESSES: Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or Send an email to [email protected]. Please include File Number S7-11-16 on the subject line; or Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments. Paper Comments Send paper comments to Brent J. Fields, Secretary, Securities and [[Page 43043]] Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number S7-11-16. This file number should be included on the subject line if email is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Web site (http://www.sec.gov/rules/proposed.shtml). Comments are also available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: James A. Cappoli, Assistant General Counsel, Office of the General Counsel, at (202) 551-7923, or Stephen M. Ng, Senior Counsel, Office of the General Counsel, at (202) 551- 7957. I. Background This interim final rule implements the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the ``2015 Act''),\1\ which amends the Federal Civil Penalties Inflation Adjustment Act of 1990 (the ``Inflation Adjustment Act'').\2\ The Inflation Adjustment Act had previously 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 maximum amount of the civil monetary penalties (``CMPs'') under the statutes administered by the agency. Pursuant to the requirements of the DCIA, the Commission has previously adopted regulations in 1996, 2001, 2005, 2009, and 2013 to adjust the maximum amount of the CMPs under the statutes the Commission administers.\4\ --------------------------------------------------------------------------- \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, Sec. 31001(s)(1), Apr. 26, 1996, 110 Stat. 1321-373, codified at 28 U.S.C. 2461 note. \4\ See 17 CFR part 201.1001 to 1005, and Tables I to V to Subpart E. --------------------------------------------------------------------------- The 2015 Act replaces the inflation adjustment mechanism prescribed in the DCIA and all previous inflation adjustments made pursuant to the DCIA with a new mechanism for calculating the inflation-adjusted amount of CMPs. Each agency must first adjust the maximum amount of CMPs \5\ with an initial ``catch-up'' adjustment.\6\ Each agency must then perform subsequent annual adjustments for inflation.\7\ This interim final rule implements the initial ``catch-up adjustment,'' which increases CMP amounts based on the percentage change between the Consumer Price Index for all Urban Consumers (``CPI-U'') for the month of October in the year the civil penalty was established or previously adjusted by a statute or regulation other than the Inflation Adjustment Act, and the October 2015 CPI-U.\8\ Annual inflation adjustments after this first catch-up adjustment will then be based on the percentage change between the October CPI-U preceding the date of the last adjustment made pursuant to the 2015 Act and the prior year's October CPI-U.\9\ Thus, in January 2017, the Commission will again adjust the maximum amount of the CMPs it administers based on the percentage change from the 2015 October CPI-U to the 2016 October CPI-U. --------------------------------------------------------------------------- \5\ The 2015 Act also applies to minimum penalty amounts and penalty ranges. See 28 U.S.C. 2461 note Sec. 5(a). All of the statutes administered by the Commission, however, only include maximum penalty amounts. Thus, in this interim final rule, we only refer to the effect of the 2015 Act on maximum penalty amounts. \6\ 28 U.S.C. 2461 note Sec. 4(b)(1); Office of Management and Budget, Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (February 24, 2016) (``OMB Guidance'') at 1, available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf. \7\ 28 U.S.C. 2461 note Sec. 4(b)(2); OMB Guidance at 1. \8\ 28 U.S.C. 2461 note Sec. 5(b)(2); OMB Guidance at 3. The catch-up adjustment excludes prior adjustments under the Inflation Adjustment Act, which were capped at 10 percent and thus contributed to a decline in the real value of penalties. See OMB Guidance at 3. The 2015 Act is intended to remedy this decline. See id. \9\ 28 U.S.C. 2461 note Sec. 5; OMB Guidance at 4. --------------------------------------------------------------------------- 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.\10\ This definition applies to the monetary penalty provisions contained in four statutes administered by the Commission: The Securities Act of 1933; the Securities Exchange Act of 1934 (the ``Exchange Act''); the Investment Company Act of 1940; and the Investment Advisers Act of 1940. In addition, the Sarbanes-Oxley Act of 2002 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).\11\ The definition of a CMP in the 1990 Act encompasses such civil monetary penalties.\12\ --------------------------------------------------------------------------- \10\ 28 U.S.C. 2461 note Sec. 3(2). Thus the adjustments prescribed by the 2015 Act do not apply to penalties written as functions of violations or to civil penalties based on the defendant's gross pecuniary gain. OMB Guidance at 2. \11\ 15 U.S.C. 7215(c)(4)(D). \12\ 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 Securities Exchange Act of 1934. As a result, penalties assessed by the PCAOB in its disciplinary proceedings are penalties ``enforced'' by the Commission for purposes of the Act. See Adjustments to Civil Monetary Penalty Amounts, Release No. 33-8530 (Feb. 4, 2005) [70 FR 7606 (Feb. 14, 2005)]. --------------------------------------------------------------------------- Accordingly, we are revising 17 CFR 201.1001 and Table I to Subpart E, to establish revised amounts for each CMP authorized by the Securities Act, the Exchange Act, the Investment Company Act, the Investment Advisers Act, and certain penalties under the Sarbanes-Oxley Act and removing Sec. 201.1002 and Table II to Subpart E, Sec. 201.1003 and Table III to Subpart E, Sec. 201.1004 and Table IV to Subpart E, and Sec. 201.1005 and Table V to Subpart E. The adjustments set forth in the amendment apply to all penalties imposed after the effective date of this interim final rule, including to penalties imposed for violations that occur before the effective date of the amendment.\13\ --------------------------------------------------------------------------- \13\ 28 U.S.C. 2461 note Sec. 6; OMB Guidance at 3-4. --------------------------------------------------------------------------- II. Summary of the Calculation In order to complete the catch-up adjustment required by the 2015 Act, the Commission must first identify, for each penalty, the year and corresponding penalty amount when the maximum penalty amount was established (i.e., as originally enacted by Congress), or last adjusted (i.e., by Congress in statute, or by the agency through regulation), whichever is later, other than pursuant to the Inflation Adjustment Act.\14\ --------------------------------------------------------------------------- \14\ 28 U.S.C. 2461 note Sec. 5(b)(2)(A); OMB Guidance at 3. References to the Inflation Adjustment Act here and below include the amendments made to that Act by the DCIA. --------------------------------------------------------------------------- The Commission must then modify the maximum amount of CMPs based on the percentage by which the CPI-U for the month of October 2015, not seasonally adjusted, exceeds the CPI-U for the month of October for the calendar year when the penalty amount was established or last adjusted. OMB has provided a table to all agencies that lists multipliers that can be used to adjust the maximum penalty amount [[Page 43044]] based on the year the penalty was established or last adjusted (the ``CPI-U Multiplier'').\15\ After applying this multiplier, the Commission must round all penalty amounts to the nearest dollar. In accordance with the 2015 Act, however, the Commission shall not increase catch-up penalty amounts by more than 150 percent of the corresponding penalty amount in effect on November 2, 2015, including penalty adjustments made pursuant to the Inflation Adjustment Act prior to that date.\16\ --------------------------------------------------------------------------- \15\ 28 U.S.C. 2461 note Sec. 5(b)(2)(B); OMB Guidance at 3, Table A. \16\ 28 U.S.C. 2461 note Sec. 5(b)(2)(C); OMB Guidance at 3. Because the 150 percent limitation is on the amount of the increase, the adjusted penalty will be up to 250 percent above the amount in effect on November 2, 2015. --------------------------------------------------------------------------- To explain the inflation adjustment calculation for CMP amounts under the 2015 Act, we provide the following example based on the CMP for certain insider trading violations by controlling persons in Exchange Act Section 21A(a)(3).\17\ --------------------------------------------------------------------------- \17\ 15 U.S.C. 78u-1(a)(3). --------------------------------------------------------------------------- Step 1: The Commission identifies the year that the CMP was established or last adjusted and the maximum CMP for that year. The maximum penalty amount for this provision was established in 1988 by the Insider Trading and Securities Fraud Enforcement Act of 1988.\18\ When established, the maximum penalty amount for a violation of this provision was $1,000,000. --------------------------------------------------------------------------- \18\ Public Law 100-704, Sec. 3(a)(2), 102 Stat. 4677-4679 (1988). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorized the Commission to impose civil penalties in cease-and-desist proceedings. See 15 U.S.C. 77h-1(g), 15 U.S.C. 78u- 2(b), 15 U.S.C. 80a-9(d)(1)(B), 15 U.S.C. 80b-3(i)(1)(B). For the Securities Act, Congress provided this authority in a new section of that Act, whereas for the Exchange Act, the Investment Company Act, and the Investment Advisers Act, Congress cross-referenced pre- existing penalty amounts for administrative proceedings that were established in 1990. Therefore, for the purposes of applying the 2015 Act, the amounts of the penalties for cease-and-desist proceedings under the Securities Act were established in 2010 and the amounts of the penalties for cease-and-desist proceedings under the Exchange Act, the Investment Company Act, and the Investment Advisers Act were established in 1990. --------------------------------------------------------------------------- Step 2: The Commission multiplies the maximum penalty amount at the time the penalty amount was established or last adjusted by the CPI-U multiplier, representing the percentage change in the CPI-U from October in the year the penalty was established or last adjusted to October 2015, and rounds that number to the nearest dollar. Thus, we multiply $1,000,000 by the multiplier for 1988, 1.97869, to determine a new inflation-adjusted maximum CMP of $1,978,690. Step 3: The Commission identifies the maximum CMP for the penalty provision as of November 2, 2015, including adjustments made pursuant to the Inflation Adjustment Act. For Section 21A(a)(3), the maximum CMP was previously adjusted in 2013 pursuant to the Inflation Adjustment Act to $1,525,000.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 201.1005, Table V. --------------------------------------------------------------------------- Step 4: The Commission multiplies the November 2, 2015 maximum CMP by 2.5 to determine what a 150 percent increase from the current penalty would be. This is the maximum increase in the CMP that can be made pursuant to the catch-up adjustment. For Section 21A(a)(3), a 150 percent increase from the current penalty would be $3,812,500. Step 5: The Commission compares the amount in Step 2 to the amount in Step 4. The lesser of these two amounts will be the new inflation- adjusted penalty amount. Because the adjusted penalty amount in Step 2, $1,978,690, is less than the maximum penalty allowed in Step 4, $3,812,500, the new inflation adjusted penalty amount for Section 21A(a)(3) is $1,978,690.\20\ --------------------------------------------------------------------------- \20\ Almost all of the new inflation-adjusted penalty amounts listed below were obtained by multiplying the penalty amount in the year the penalty was established or last adjusted by the CPI-U multiplier. The only exception is the civil penalty for violations of Exchange Act Section 32(b), 15 U.S.C. 78ff(b), in which the inflation-adjusted penalty amount would have been greater than the maximum 150 percent increase allowed by the 2015 Act. --------------------------------------------------------------------------- III. The Commission Declines To Seek a Reduced Catch-Up Adjustment Determination The 2015 Act allows agencies, after obtaining concurrence from OMB, to adjust penalties pursuant to a reduced catch-up adjustment determination.\21\ In making such an adjustment, the agency must publish a notice of proposed rulemaking, provide an opportunity for comment, and determine in a final rule that a reduced catch-up adjustment determination is warranted because the otherwise required increase of a maximum penalty amount would have a negative economic impact, or because the social costs of the otherwise required adjustment would outweigh the benefits.\22\ --------------------------------------------------------------------------- \21\ OMB has stated its expectation that it will only rarely concur with a proposal to reduce penalty amounts below that required by the 2015 Act. See OMB Guidance at 3. \22\ 28 U.S.C. 2461 note Sec. 4(c); OMB Guidance at 3. --------------------------------------------------------------------------- We have concluded that such a reduced catch-up adjustment determination is not necessary and instead have adopted the adjustments prescribed by the 2015 Act. The increases envisioned by the 2015 Act ensure that the Commission's CMPs maintain their deterrent and remedial effect and prevent these desired effects from being diminished by inflation. We do not believe they will have a negative economic impact.\23\ Further, while the adjustments required by the 2015 Act do raise the maximum amounts of the Commission's CMPs, the percentage increases in the maximum amounts are generally consistent with previous inflation adjustments and the Commission and the courts always maintain the discretion to impose a lower penalty amount if the new maximum amount would be unjust or inappropriate in a particular case. --------------------------------------------------------------------------- \23\ See infra Section VI for the Commission's Economic Analysis. --------------------------------------------------------------------------- IV. Request for Comment We request and encourage interested persons to submit comments on any aspect of this interim final rule, other matters that might have an impact on the rule, and any suggestions for additional changes. In particular, we invite comments on whether, contrary to the conclusion set forth above, the Commission should seek a reduced catch-up adjustment determination. Comments on this topic should address the statutory bases for requesting a reduced catch-up adjustment determination: (1) Whether the otherwise required increase of the maximum amount of the CMPs administered by the Commission would have a negative economic impact, or (2) whether the social costs of adopting the otherwise required increase of the maximum amount of these CMPs would outweigh the benefits. With respect to any such comments, they are of greatest assistance if accompanied by supporting data and analysis of the issues listed above. V. Procedural and Other Matters Given that the Commission is not seeking a reduced catch-up adjustment determination, the Commission is required by the 2015 Act to adjust the CMPs within its jurisdiction for inflation using a statutorily prescribed formula and the 2015 Act mandates that the initial catch-up adjustment be made through an interim final rule effective not later than August 1, 2016.\24\ In light of this Congressional mandate, the Commission finds that good cause exists to dispense with public notice and comment pursuant to the notice and comment provisions of the [[Page 43045]] Administrative Procedure Act (``APA'').\25\ Under the Regulatory Flexibility Act (``RFA''), a regulatory flexibility analysis is required only when an agency must publish a general notice of proposed rulemaking.\26\ As noted above, public notice and comment is not required for this interim final rule; therefore, a regulatory flexibility analysis is not required. Further, this rule does not contain any collection of information requirements as defined by the Paperwork Reduction Act of 1995 as amended.\27\ --------------------------------------------------------------------------- \24\ 28 U.S.C. 2461 note Sec. 4(b)(1). \25\ 5 U.S.C. 553(b)(3)(B). This finding also satisfies the requirements of 5 U.S.C. 808(2), allowing the amendment to become effective notwithstanding the requirement of 5 U.S.C. 801 (if a federal agency finds that notice and public comment are impractical, unnecessary or contrary to the public interest, a rule shall take effect at such time as the federal agency promulgating the rule determines). \26\ 5 U.S.C. 603. \27\ 44 U.S.C. 3501 et. seq. --------------------------------------------------------------------------- VI. Economic Analysis The Commission is sensitive to the costs and benefits that result from its rules. The baseline for this analysis is the statutory framework described above in Section I. In enacting the 2015 Act, Congress directed the Commission to adjust CMPs in accordance with inflation. The Commission notes that this regulation has no impact on disclosure or compliance costs. The Commission further notes that the CMPs ordered in SEC proceedings and PCAOB disciplinary proceedings in fiscal year 2015 totaled approximately $1,176 million. The inflationary adjustment required by the 2015 Act results in the increase of the maximum amount of the CMPs administered by the Commission of approximately 7.67% to 11.3%. Assuming that the Commission is successful in obtaining civil monetary penalties in fiscal years subsequent to the enactment of this regulation in similar proportion to that obtained in fiscal year 2015, the inflationary adjustment pursuant to the new regulation would result in an increase in the civil monetary penalties ordered of approximately $90.1 million to $132.9 million. This potential increase, however, overstates the effect of the rule. First, these figures represent the amount of penalties that could be potentially ordered, whereas the amount of penalties collected in any given year--the amount of penalties that would affect the economy-- can be lower than the ordered amount. Second, penalties imposed in insider trading cases brought in district court are based on the profit gained or loss avoided as a result of the violation rather than by reference to a statutory dollar amount that is affected by this regulation.\28\ The average annual amount of penalties obtained in insider trading cases from FY 2010 through FY 2015 is $108.2 million. Third, in many cases where the Commission has obtained large civil monetary penalties, such penalties were calculated on the basis of the defendant's gross pecuniary gain rather than the maximum penalty dollar amount set by statute that will be adjusted by the proposed rule.\29\ In addition, the intent of the new regulation is merely to keep pace with changes in the economy, not to impose new costs. Therefore, for the instances in which CMPs affected by this rulemaking are imposed, the Commission does not believe that adjusting civil monetary penalties pursuant to the 2015 Act will significantly affect the amount of penalties it obtains beyond that necessary to keep pace with inflation. --------------------------------------------------------------------------- \28\ 15 U.S.C. 78u-1(a)(2). \29\ For example, 15 U.S.C. 77t(d)(2)(A), after adjusting for inflation as required by the 2015 Act, provides that the amount of the penalty shall not exceed the greater of $8,908 for a natural person or $89,708 for any other person, or the gross amount of pecuniary gain to such defendant as a result of the violation. --------------------------------------------------------------------------- The benefit provided by the inflationary adjustment to the maximum civil monetary penalties is that of maintaining the level of deterrence effectuated by the civil monetary penalties, and not allowing such deterrent effect to be diminished by inflation. The costs of implementing this rule should be negligible because the only change from the current, baseline situation is determining potential penalties using a new maximum dollar amount. VII. Statutory Basis The Commission is adopting these revisions to 17 CFR part 201, subpart E pursuant to the directives and authority of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74, 129 Stat. 599-601 (Nov. 2, 2015). List of Subjects in 17 CFR Part 201 Administrative practice and procedure, Claims, Confidential business information, Lawyers, Penalties, Securities. Text of Amendment For the reasons set forth in the preamble, part 201, title 17, chapter II of the Code of Federal Regulations is amended by revising Subpart E as set forth below: PART 201--RULES OF PRACTICE Subpart E--Adjustment of Civil Monetary Penalties Sec. 201.1001 Adjustment of civil monetary penalties--2016. Table I to Subpart E of Part 201-- Civil monetary penalty inflation adjustments. Authority: 28 U.S.C. 2461 note. Subpart E--Adjustment of Civil Monetary Penalties Sec. 201.1001 Adjustment of civil monetary penalties--2016. As required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, 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, and certain penalties under the Sarbanes-Oxley Act of 2002 are adjusted for inflation in accordance with Table I to this subpart E. The adjustments set forth in Table I to this subpart E apply to all penalties imposed after August 1, 2016, including to penalties imposed for violations that occur before August 1, 2016. [[Page 43046]] Table I to Subpart E of Part 201--Civil Monetary Penalty Inflation Adjustments -------------------------------------------------------------------------------------------------------------------------------------------------------- Maximum New adjusted Year penalty Maximum penalty maximum amount was penalty amount in penalty U.S. Code citation Civil monetary penalty description established or amount when effect on amount last adjusted established or November 2, effective * last adjusted 2015 August 1, 2016 -------------------------------------------------------------------------------------------------------------------------------------------------------- Securities and Exchange Commission: 15 U.S.C. 77h-1(g)........................ For natural person.......................... 2010 $7,500 $7,500 $8,156 For any other person........................ 2010 75,000 80,000 81,559 For natural person/fraud.................... 2010 75,000 80,000 81,559 For any other person/fraud.................. 2010 375,000 400,000 407,794 For natural person/substantial losses or 2010 150,000 160,000 163,118 risk of losses to others or gains to self. For any other person/substantial losses or 2010 725,000 775,000 788,401 risk of losses to others or gain to self. 15 U.S.C. 77t(d).......................... For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others. 15 U.S.C. 78ff(b)......................... Exchange Act/failure to file information 1936 100 210 525 documents, reports. 15 U.S.C. 78ff(c)(1)(B)................... Foreign Corrupt Practices--any issuer....... 1988 10,000 16,000 19,787 15 U.S.C. 78ff(c)(2)(B)................... Foreign Corrupt Practices--any agent or 1988 10,000 16,000 19,787 stockholder acting on behalf of issuer. 15 U.S.C. 78u-1(a)(3)..................... Insider Trading--controlling person......... 1988 1,000,000 1,525,000 1,978,690 15 U.S.C. 78u-2........................... For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others or gains to self. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others or gain to self. 15 U.S.C. 78u(d)(3)....................... For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others. 15 U.S.C. 80a-9(d)........................ For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others or gains to self. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others or gain to self. 15 U.S.C. 80a-41(e)....................... For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others. 15 U.S.C. 80b-3(i)........................ For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others or gains to self. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others or gain to self. 15 U.S.C. 80b-9(e)........................ For natural person.......................... 1990 5,000 7,500 8,908 For any other person........................ 1990 50,000 80,000 89,078 For natural person/fraud.................... 1990 50,000 80,000 89,078 [[Page 43047]] For any other person/fraud.................. 1990 250,000 400,000 445,390 For natural person/substantial losses or 1990 100,000 160,000 178,156 risk of losses to others. For any other person/substantial losses or 1990 500,000 775,000 890,780 risk of losses to others. 15 U.S.C. 7215(c)(4)(D)(i)................ For natural person.......................... 2002 100,000 130,000 131,185 For any other person........................ 2002 2,000,000 2,525,000 2,623,700 15 U.S.C. 7215(c)(4)(D)(ii)............... For natural person.......................... 2002 750,000 950,000 983,888 For any other person........................ 2002 15,000,000 18,925,000 19,677,750 -------------------------------------------------------------------------------------------------------------------------------------------------------- * Adjustments include any revisions by Congress in statute, or by the agency through regulation, other than pursuant to the Inflation Adjustment Act. Dated: June 27, 2016. By the Commission. Brent J. Fields, Secretary. [FR Doc. 2016-15541 Filed 6-30-16; 8:45 am] BILLING CODE 8011-01-P
![43042 Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Rules and Regulations
Subpart 1214.7—The Authority of the personnel on board the spacecraft Subpart 1214.17—[Removed and
NASA Commander including Federal officers and Reserved]
employees and all other persons
§ 1214.700 Scope. whether or not they are U.S. nationals. ■ 9. Remove and reserve subpart
This subpart establishes the authority (c) The authority of the NASA 1214.17, consisting of sections
of the NASA Commander of a NASA Commander extends to all spaceflight 1214.1700 through 1214.1707.
mission, excluding missions related to elements, payloads, and activities
Cheryl E. Parker,
the ISS and activities licensed under originating with or defined to be a part
Federal Register Liaison Officer.
Title 51 U.S.C. Chapter 509, to enforce of the NASA mission.
order and discipline during a mission (d) The NASA Commander may, [FR Doc. 2016–15431 Filed 6–30–16; 8:45 am]
and to take whatever action in his/her when he/she deems such action to be BILLING CODE P
judgment is reasonable and necessary necessary for the safety of the spacecraft
for the protection, safety, and well-being and personnel on board, subject any of
of all personnel and on-board the personnel on board to such restraint SECURITIES AND EXCHANGE
equipment, including the spacecraft and as the circumstances require until such COMMISSION
payloads. During the final launch time as delivery of such individual or
countdown, following crew ingress, the individuals to the proper authorities is 17 CFR Part 201
NASA Commander has the authority to possible. [Release Nos. 33–10104; 34–78156; IA–
enforce order and discipline among all § 1214.703 Chain of command.
4437; IC–32162; File No. S7–11–16]
on-board personnel. During emergency
(a) The NASA Commander is a RIN 3235–AL94
situations prior to liftoff, the NASA
trained NASA astronaut who has been
Commander has the authority to take Adjustments to Civil Monetary Penalty
designated to serve as commander on a
whatever action in his/her judgment is Amounts
NASA mission and who shall have the
necessary for the protection or security,
authority described in § 1214.702 of this AGENCY: Securities and Exchange
safety, and well-being of all personnel
part. Under normal flight conditions Commission.
on board.
(other than emergencies or when ACTION: Interim final rule; request for
§ 1214.701 Definitions. otherwise designated) the NASA comment.
(a) The flight crew consists of the Commander is responsible to the
NASA Commander, astronaut crew Mission Flight Director. SUMMARY: The Securities and Exchange
members, and [any] other persons (b) Before each flight, the other flight Commission (the ‘‘Commission’’) is
aboard the spacecraft. crewmembers will be designated in the adopting an interim final rule to
(b) A mission is the period including order in which they will assume the implement the Federal Civil Penalties
the flight-phases from launch to landing authority of the NASA Commander Inflation Adjustment Act Improvements
under this subpart in the event that the Act of 2015, which amended the Federal
on the surface of the Earth—a single
NASA Commander is not able to carry Civil Penalties Inflation Adjustment Act
round trip. (In the case of a forced
out his/her duties. of 1990, as previously amended by the
landing, the NASA Commander’s (c) The determinations, if any, that a
authority continues until a competent Debt Collection Improvement Act of
crewmember in the chain of command 1996. This interim final rule adjusts for
authority takes over the responsibility is not able to carry out his or her
for the persons and property aboard). inflation the maximum amount of civil
command duties and is, therefore, to be monetary penalties under the Securities
(c) The flight-phases consist of relieved of command, and that another
launch, in orbit/transit, extraterrestrial Act of 1933, the Securities Exchange Act
crewmember in the chain of command of 1934, the Investment Company Act of
mission, deorbit, entry, and landing, is to succeed to the authority of the
and post-landing back on Earth. 1940, the Investment Advisers Act of
NASA Commander, will be made by the 1940, and certain penalties under the
(d) A payload is a specific NASA Administrator or his/her
complement of instruments, space Sarbanes-Oxley Act of 2002.
designee.
equipment, and support hardware/ DATES: Effective Date: This interim final
software carried into space to § 1214.704 Violations. rule is effective on August 1, 2016.
accomplish a scientific mission or (a) All personnel on board the NASA Comment Date: Comments on the
discrete activity. mission are subject to the authority of interim final rule should be received on
the NASA Commander and shall or before August 15, 2016.
§ 1214.702 Authority and responsibility of
the NASA Commander.
conform to his/her orders and direction ADDRESSES: Comments may be
as authorized by this subpart. submitted by any of the following
(a) During all flight phases, the NASA (b) This subpart is a regulation within methods:
Commander shall have the absolute the meaning of 18 U.S.C. 799, and
authority to take whatever action is in whoever willfully violates, attempts to Electronic Comments
his/her discretion necessary to: violate, or conspires to violate any • Use the Commission’s Internet
(1) Enhance order and discipline. provision of this subpart or any order or comment form (http://www.sec.gov/
(2) Provide for the safety and well- direction issued under this subpart shall rules/proposed.shtml); or
being of all personnel on board. be subject to fines and imprisonment, as • Send an email to rule-comments@
(3) Provide for the protection of the specified by law. sec.gov. Please include File Number S7–
asabaliauskas on DSK3SPTVN1PROD with RULES
spacecraft and payloads. 11–16 on the subject line; or
The NASA Commander shall have Subpart 1214.8—[Removed and • Use the Federal eRulemaking Portal
authority, throughout the mission, to Reserved] (http://www.regulations.gov). Follow the
use any reasonable and necessary instructions for submitting comments.
means, including the use of physical ■ 8. Remove and reserve subpart 1214.8,
force, to achieve this end. consisting sections 1214.800 through Paper Comments
(b) The authority of the NASA 1214.813. • Send paper comments to Brent J.
Commander extends to any and all * * * * * Fields, Secretary, Securities and
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![Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Rules and Regulations 43043
Exchange Commission, 100 F Street NE., maximum amount of CMPs 5 with an 2002 provides the Public Company
Washington, DC 20549–1090. initial ‘‘catch-up’’ adjustment.6 Each Accounting Oversight Board (the
All submissions should refer to File agency must then perform subsequent ‘‘PCAOB’’) authority to levy civil
Number S7–11–16. This file number annual adjustments for inflation.7 This monetary penalties in its disciplinary
should be included on the subject line interim final rule implements the initial proceedings pursuant to 15 U.S.C.
if email is used. To help us process and ‘‘catch-up adjustment,’’ which increases 7215(c)(4)(D).11 The definition of a CMP
review your comments more efficiently, CMP amounts based on the percentage in the 1990 Act encompasses such civil
please use only one method. The change between the Consumer Price monetary penalties.12
Commission will post all comments on Index for all Urban Consumers (‘‘CPI– Accordingly, we are revising 17 CFR
the Commission’s Web site (http:// U’’) for the month of October in the year 201.1001 and Table I to Subpart E, to
www.sec.gov/rules/proposed.shtml). the civil penalty was established or establish revised amounts for each CMP
Comments are also available for Web previously adjusted by a statute or authorized by the Securities Act, the
site viewing and printing in the regulation other than the Inflation Exchange Act, the Investment Company
Commission’s Public Reference Room, Adjustment Act, and the October 2015 Act, the Investment Advisers Act, and
100 F Street NE., Washington, DC CPI–U.8 Annual inflation adjustments certain penalties under the Sarbanes-
20549, on official business days after this first catch-up adjustment will Oxley Act and removing § 201.1002 and
between the hours of 10:00 a.m. and then be based on the percentage change Table II to Subpart E, § 201.1003 and
3:00 p.m. All comments received will be between the October CPI–U preceding Table III to Subpart E, § 201.1004 and
posted without change; we do not edit the date of the last adjustment made Table IV to Subpart E, and § 201.1005
personal identifying information from pursuant to the 2015 Act and the prior and Table V to Subpart E. The
submissions. You should submit only year’s October CPI–U.9 Thus, in January adjustments set forth in the amendment
information that you wish to make 2017, the Commission will again adjust apply to all penalties imposed after the
available publicly. the maximum amount of the CMPs it effective date of this interim final rule,
FOR FURTHER INFORMATION CONTACT: administers based on the percentage including to penalties imposed for
James A. Cappoli, Assistant General change from the 2015 October CPI–U to violations that occur before the effective
Counsel, Office of the General Counsel, the 2016 October CPI–U. date of the amendment.13
at (202) 551–7923, or Stephen M. Ng, A CMP is defined in relevant part as
any penalty, fine, or other sanction that: II. Summary of the Calculation
Senior Counsel, Office of the General
Counsel, at (202) 551–7957. (1) Is for a specific amount, or has a In order to complete the catch-up
maximum amount, as provided by adjustment required by the 2015 Act,
I. Background federal law; and (2) is assessed or the Commission must first identify, for
This interim final rule implements the enforced by an agency in an each penalty, the year and
Federal Civil Penalties Inflation administrative proceeding or by a corresponding penalty amount when the
Adjustment Act Improvements Act of federal court pursuant to federal law.10 maximum penalty amount was
2015 (the ‘‘2015 Act’’),1 which amends This definition applies to the monetary established (i.e., as originally enacted by
the Federal Civil Penalties Inflation penalty provisions contained in four Congress), or last adjusted (i.e., by
Adjustment Act of 1990 (the ‘‘Inflation statutes administered by the Congress in statute, or by the agency
Adjustment Act’’).2 The Inflation Commission: The Securities Act of through regulation), whichever is later,
Adjustment Act had previously been 1933; the Securities Exchange Act of other than pursuant to the Inflation
amended by the Debt Collection 1934 (the ‘‘Exchange Act’’); the Adjustment Act.14
Improvement Act of 1996 (‘‘DCIA’’) 3 to Investment Company Act of 1940; and The Commission must then modify
require that each federal agency adopt the Investment Advisers Act of 1940. In the maximum amount of CMPs based on
regulations at least once every four years addition, the Sarbanes-Oxley Act of the percentage by which the CPI–U for
that adjust for inflation the maximum the month of October 2015, not
5 The 2015 Act also applies to minimum penalty
amount of the civil monetary penalties seasonally adjusted, exceeds the CPI–U
(‘‘CMPs’’) under the statutes amounts and penalty ranges. See 28 U.S.C. 2461
note Sec. 5(a). All of the statutes administered by for the month of October for the
administered by the agency. Pursuant to the Commission, however, only include maximum calendar year when the penalty amount
the requirements of the DCIA, the penalty amounts. Thus, in this interim final rule, was established or last adjusted. OMB
Commission has previously adopted we only refer to the effect of the 2015 Act on has provided a table to all agencies that
regulations in 1996, 2001, 2005, 2009, maximum penalty amounts.
6 28 U.S.C. 2461 note Sec. 4(b)(1); Office of
lists multipliers that can be used to
and 2013 to adjust the maximum Management and Budget, Implementation of the adjust the maximum penalty amount
amount of the CMPs under the statutes Federal Civil Penalties Inflation Adjustment Act
the Commission administers.4 Improvements Act of 2015 (February 24, 2016) 11 15 U.S.C. 7215(c)(4)(D).
The 2015 Act replaces the inflation (‘‘OMB Guidance’’) at 1, available at https:// 12 The Commission may by order affirm, modify,
www.whitehouse.gov/sites/default/files/omb/ remand, or set aside sanctions, including civil
adjustment mechanism prescribed in memoranda/2016/m-16-06.pdf. monetary penalties, imposed by the PCAOB. See
the DCIA and all previous inflation 7 28 U.S.C. 2461 note Sec. 4(b)(2); OMB Guidance
Section 107(c) of the Sarbanes-Oxley Act of 2002,
adjustments made pursuant to the DCIA at 1. 15 U.S.C. 7217. The Commission may enforce such
with a new mechanism for calculating 8 28 U.S.C. 2461 note Sec. 5(b)(2); OMB Guidance orders in federal district court pursuant to Section
the inflation-adjusted amount of CMPs. at 3. The catch-up adjustment excludes prior 21(e) of the Securities Exchange Act of 1934. As a
adjustments under the Inflation Adjustment Act, result, penalties assessed by the PCAOB in its
Each agency must first adjust the which were capped at 10 percent and thus disciplinary proceedings are penalties ‘‘enforced’’
asabaliauskas on DSK3SPTVN1PROD with RULES
contributed to a decline in the real value of by the Commission for purposes of the Act. See
1 Public Law 114–74 Sec. 701, 129 Stat. 599–601
penalties. See OMB Guidance at 3. The 2015 Act Adjustments to Civil Monetary Penalty Amounts,
(Nov. 2, 2015), codified at 28 U.S.C. 2461 note. is intended to remedy this decline. See id. Release No. 33–8530 (Feb. 4, 2005) [70 FR 7606
2 Public Law 101–410, 104 Stat. 890–892 (1990), 9 28 U.S.C. 2461 note Sec. 5; OMB Guidance at (Feb. 14, 2005)].
codified at 28 U.S.C. 2461 note. 4. 13 28 U.S.C. 2461 note Sec. 6; OMB Guidance at
3 Public Law 104–134, Title III, § 31001(s)(1), Apr. 10 28 U.S.C. 2461 note Sec. 3(2). Thus the 3–4.
26, 1996, 110 Stat. 1321–373, codified at 28 U.S.C. adjustments prescribed by the 2015 Act do not 14 28 U.S.C. 2461 note Sec. 5(b)(2)(A); OMB
2461 note. apply to penalties written as functions of violations Guidance at 3. References to the Inflation
4 See 17 CFR part 201.1001 to 1005, and Tables or to civil penalties based on the defendant’s gross Adjustment Act here and below include the
I to V to Subpart E. pecuniary gain. OMB Guidance at 2. amendments made to that Act by the DCIA.
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![Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Rules and Regulations 43047
TABLE I TO SUBPART E OF PART 201—CIVIL MONETARY PENALTY INFLATION ADJUSTMENTS—Continued
New adjusted
Maximum
Maximum maximum
Year penalty penalty
penalty penalty
amount was amount in
U.S. Code citation Civil monetary penalty description amount when amount
established or effect on
established or effective
last adjusted * November 2,
last adjusted August 1,
2015 2016
For any other person/fraud ......................... 1990 250,000 400,000 445,390
For natural person/substantial losses or 1990 100,000 160,000 178,156
risk of losses to others.
For any other person/substantial losses or 1990 500,000 775,000 890,780
risk of losses to others.
15 U.S.C. 7215(c)(4)(D)(i) ..... For natural person ....................................... 2002 100,000 130,000 131,185
For any other person ................................... 2002 2,000,000 2,525,000 2,623,700
15 U.S.C. 7215(c)(4)(D)(ii) .... For natural person ....................................... 2002 750,000 950,000 983,888
For any other person ................................... 2002 15,000,000 18,925,000 19,677,750
* Adjustments include any revisions by Congress in statute, or by the agency through regulation, other than pursuant to the Inflation Adjust-
ment Act.
Dated: June 27, 2016. Director of the Federal Register as of when preparing documents for
By the Commission. July 1, 2016. electronic submission.3
Brent J. Fields, FOR FURTHER INFORMATION CONTACT: In The EDGAR system will be upgraded
Secretary. the Division of Corporate Finance, for to Release 16.2 on June 13, 2016 and
[FR Doc. 2016–15541 Filed 6–30–16; 8:45 am] questions concerning Asset-Backed will introduce the following changes:
Securities related submission form EDGAR will be updated to allow
BILLING CODE 8011–01–P
types, contact Vik Sheth at (202) 551– registrants whose Standard Industrial
3818; and in the Division of Economic Classification (SIC) code is not 6189
SECURITIES AND EXCHANGE and Risk Analysis, for questions (asset-backed securities) to file the
COMMISSION concerning unsupported taxonomies following asset-backed securities related
and Inline XBRL, contact Walter submission form types:
17 CFR Part 232 Hamscher at (202) 551–5397. • SF–1, SF–1/A, SF–3, SF–3/A, SF–
SUPPLEMENTARY INFORMATION: We are 3MEF, 424H, 424H/A, ABS–EE, ABS–
[Release Nos. 33–10095; 34–78044; 39– adopting an updated EDGAR Filer EE/A, 8–K, 8–K/A, 10–D, and 10–D/A.
2510; IC–32145] Manual, Volume II. The Filer Manual The following fields will now be
describes the technical formatting required for all filers submitting form
Adoption of Updated EDGAR Filer requirements for the preparation and types 10–D and 10–D/A and providing
Manual submission of electronic filings through Item 6 or attaching an EX–36 on
the EDGAR system.1 It also describes submission form types 8–K and 8–K/A,
AGENCY: Securities and Exchange
the requirements for filing using irrespective of the filer’s SIC code:
Commission.
EDGARLink Online and the Online • Sponsor CIK
ACTION: Final rule.
Forms/XML Web site. • Depositor CIK
SUMMARY: The Securities and Exchange The revisions to the Filer Manual • ABS Asset Class
Commission (the Commission) is reflect changes within Volume II EDGAR will no longer provide
adopting revisions to the Electronic Data entitled EDGAR Filer Manual, Volume support for the US–GAAP–2014, EXCH–
Gathering, Analysis, and Retrieval II: ‘‘EDGAR Filing,’’ Version 37 (June 2014, COUNTRY–2012, and
System (EDGAR) Filer Manual and 2016). The updated manual will be CURRENCY–2012 taxonomies. Please
related rules to reflect updates to the incorporated by reference into the Code see http://www.sec.gov/info/edgar/
EDGAR system. The updates are being of Federal Regulations. edgartaxonomies.shtml for a complete
made primarily to support the The Filer Manual contains all the listing of supported standard
submission of asset-backed securities technical specifications for filers to taxonomies.
(ABS) related form types by registrants submit filings using the EDGAR system. Pursuant to a Commission exemptive
whose Standard Industrial Classification Filers must comply with the applicable order issued on June 13, 2016, certain
(SIC) code is not 6189; terminate provisions of the Filer Manual in order filers will be able to use Inline XBRL in
support for the US–GAAP–2014, EXCH– to assure the timely acceptance and their Related Official Filing for a limited
2014, COUNTRY–2012, and processing of filings made in electronic period of time until March of the year
CURRENCY–2012 taxonomies; and format.2 Filers may consult the Filer 2020, provided that the structured
allow certain filers to use Inline XBRL Manual in conjunction with our rules information satisfies all other
in their Related Official Filing, provided governing mandated electronic filing submission requirements and
asabaliauskas on DSK3SPTVN1PROD with RULES
that the structured information satisfies conditions specified in the order are
29 For example, 15 U.S.C. 77t(d)(2)(A), after
all other submission requirements. The met. Inline XBRL is a file format
adjusting for inflation as required by the 2015 Act,
EDGAR system is scheduled to be provides that the amount of the penalty shall not
permitting both HTML and Interactive
upgraded to support these exceed the greater of $8,908 for a natural person or Data tags. Instructions for formatting
functionalities on June 13, 2016. $89,708 for any other person, or the gross amount
of pecuniary gain to such defendant as a result of 3 See Release No. 33–10071 in which we
DATES: Effective July 1, 2016. The the violation. implemented EDGAR Release 16.1. For additional
incorporation by reference of the 1 We originally adopted the Filer Manual on April history of Filer Manual rules, please see the cites
EDGAR Filer Manual is approved by the 1, 1993, with an effective date of April 26, 1993. therein.
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Document Created: 2016-07-14 11:37:56
Document Modified: 2016-07-14 11:37:56
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Interim final rule; request for comment. | |
| Contact | James A. Cappoli, Assistant General Counsel, Office of the General Counsel, at (202) 551-7923, or Stephen M. Ng, Senior Counsel, Office of the General Counsel, at (202) 551- 7957. | |
| FR Citation | 81 FR 43042 | |
| RIN Number | 3235-AL94 | |
| CFR Associated | Administrative Practice and Procedure; Claims; Confidential Business Information; Lawyers; Penalties and Securities |
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